____ is a general term applied to any use of computers and networking to support the paperless exchange of goods, information, a
1 answer:
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Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%
Question:
The question is incomplete. See the complete question below and the graph.
You are given the following data;
Cost = C = $12,000.00
w = $100.00 per unit of labor
r = $100.00 per unit of capital
These data are used to construct the isocost line (C) in the diagram to the right. Suppose the wage increases to $200.00 but that the firm chooses to keep using the same amount of labor and capital to produce 200 units of output. Given this new set of factor prices (w'=$200.00, r = $100.00), how much have costs changed if the set of input choices remains at point A? Enter a numeric response using a real number rounded to two decimal places.)
Answer:
Cost change = $6,000
Explanation:
Given Data:
Cost = C = $12,000.00
w = $100.00 per unit of labor
r = $100.00 per unit of capital
Calculating the cost incurred at point A using the equation of iso-costline C¹, we have;
C = wl + rk
where;
C = total cost
w = price of labor = $100
l = labor = 60 unit from the graph
k = capital = 60 unit from the graph
r = price of capital = $100
Substituting into the formula, we have
C = wl + rk
= 100*60 + 100*60
= 6000+6000
= $12,000
For increase in wages(w= $200, r = $100) with same amount of labor and capital, the cost incurred becomes;
C = wl + rk
= 200*60+100*60
= 12,000 + 6000
= $18,000
Therefore,
Cost change = 18000-12000
= $6,000
See the attached graph.
