Answer:
9.14%
Explanation:
The computation of the weighted average cost of capital is shown below:-
Debt = $500,000 × 1.02
= $0.51 m
Preferred = 40,000 × $34
= $1.36 m
Common = 104,000 × $20
= $2.08 m
Total = $0.51 m + $1.36 m + $2.08 m
= $3.95 m
So, Weighted average cost of capital = ($2.08 ÷ $3.95 m × 0.11) + ($1.36 m ÷ $3.95 m × 0.08) + (($0.51 m ÷ 3.95 m × 0.07 × (1 - 0.34))
= 0.057924 + 0.027544 + 0.005965
= 0.091433
or 9.14%
Therefore for computing the weighted average cost of capital we simply applied the above equation.
Answer:
Please see the attachment
Explanation:
Please see the attachment . The correct answer is e. 7.47% . Please see if you can follow the steps outlined on the attachment .
Answer:
The company's margin of safety in dollars is $1,640,000 .
Explanation:
Margin of Safety is the amount in units or dollars by which sales may fall before a Company starts making a loss.
The first step is to calculate break even point in dollar sales.
Break even point in dollar sales = Fixed Costs / Contribution Margin Ratio
Where,
Fixed Costs = Contribution margin - Operating Income
= $560,000 - $410,000
= $150,000
Contribution Margin Ratio = Contribution margin ÷ Sales revenue
= $560,000 ÷ $2,240,000
= 0.25
Thus,
Break even point in dollar sales = $150,000 / 0.25
= $600,000
Margin of Safety = Expect Sales - Break Even Sales
= $2,240,000 - $600,000
= $1,640,000
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