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yarga [219]
2 years ago
10

brutus co. exists in a world with taxes, but otherwise, capital markets are perfect. brutus co's debt cost of capital is 6%, its

equity cost of capital is 11%, its weighted average cost of capital is 5.8% and its tax rate is 25%. what's brutus co's leverage ratio? group of answer choices 40% 80% 20% 60%
Business
1 answer:
FinnZ [79.3K]2 years ago
5 0

Brutus co's leverage ratio is  40%

<h3>What leverage ratio?</h3>
  • The weighted average cost of capital (WACC), which includes common stock, preferred stock, bonds, and other types of debt, is the average after-tax cost of capital for a company. The WACC is the typical interest rate that a business anticipates paying to finance its assets.
  • The rate that a business is anticipated to charge on average to all of the holders of its securities in order to fund its

Cost of capital is 6%, its equity cost of capital is 11%, its weighted average cost of capital is 5.8% and its tax rate is 25%.

WACC = (5.8% x 25%) + (5.8% x 11% x 6%)

WACC = 3.973

WACC =   40%

Brutus co's leverage ratio is  40%

To learn more about WACC refer to:

brainly.com/question/25566972

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mixas84 [53]

Answer:

A. becomes a variable cost

Explanation:

Fixed costs are the expenses that remain constant in a period. During the period under review, fixed costs do not change regardless of the level of output. Fixed costs are mostly made up of overheads such as rent , depreciation, and administrative salaries.

Fixed cost remains constant in a particular financial year. In the long run,  business budgets and projections tend to change, resulting in changes to the fixed cost. In other words, in the long run, fixed costs will change. Therefore, in the long run, all costs are variable expenses.

5 0
3 years ago
Daniela is a 25% partner in the JRD Partnership. On January 1, JRD makes a proportionatedistribution of $16,000 cash, inventory
Olenka [21]

Answer: B. $5,000 inventory, $0 accounts receivable

Explanation:

Daniel's basis in JRD is $21,000

Inventory fair value is $16,000

$21,000 - $16,000 = $5,000

Accounts receivable inside basis is $0.

Inside basis is basically each partner's tax basis in the partnership.

8 0
3 years ago
assume you take a first and second loan on a commercial property; both are interest-only loans with one financing 60% of the pur
Juliette [100K]

If you look at the information in the question, you'll notice that the return is less than the cost of borrowing (loan interest rate) (ATIRR). This indicates that there is negative leverage and that the property cannot utilise it.

Positive leverage would be created in the first year if the property was purchased with expected returns equivalent to leverage.

Financial leverage is the process of using borrowed money (debt) to buy assets in the expectation that the income from the new asset or capital gain would outweigh the cost of borrowing. The leverage is summed up in this idea. By using debt (loan money), or leverage, we mean to increase the profits on an investment or project.

Leverage allows investors to increase their market buying power.

Leverage is a tool used by businesses to finance their assets. Rather than issuing stock to raise money, businesses can use debt to finance operations in an effort to boost shareholder value.

The most popular financial leverage ratios to determine how hazardous a company's position is are debt-to-assets and debt-to-equity.

To know more about Leverage visit:

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6 0
1 year ago
Purchasing resources that a company needs in order to operate is called a(n) ________ activity.
Kruka [31]
The answer to this question is the term investing activity. An investing activity is an item in the cash flow items that reports the gains and losses from the investments. Examples of records in the investing activity are the acquisition or franchise of restaurant, proceeds from the sale of properties, and capital expenditures.
6 0
4 years ago
If Black Diamond has teams of employees working on projects from nations around the world with varying cultural backgrounds and
kiruha [24]

Answer:

d. Deep-level diversity

Explanation:

The term diversity includes the differences that are possessed by the individuals and that distinguishes them from each other. The variation in physical attributes, beliefs, nationality, religion and other such aspects helps in building what is termed to be diversity.  

Deep-level diversity is characterized with the attributes that are non-observable. The beliefs, ideas, values and religion are the attributes of deep-level diversity.  

According to the given excerpt, the cultural backgrounds and outdoor interests are the aspects that are unobservable and therefore grouped under deep-level diversity.

3 0
3 years ago
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