By definition, the Weighted Average Cost of Capital or WACC is
the rate that an organization is expected to pay to all its security holders to
finance its assets.
Mathematically this can be calculated by summation of the
weighted average of the cost:
wacc = 0.4 * 0.06 + 0.15 * 0.075 + 0.45 * 0.13
wacc = 9.38%
Answer:
7%
Explanation:
nominal interest rate = real interest rate + expected inflation rate
nominal interest rate = 5% + 2% = 7%
Usually the nominal interest rate has four major components:
- real interest rate: the net interest rate received by a lender or an investor
- inflation rate: the general rise in the prices of goods and services, as inflation increases, the purchasing power of a currency decreases
- liquidity risk premium: usually collateralized loans include a liquidity risk premium since not all assets can be easily converted to cash.
- credit risk: possibility of the borrower defaulting the loan
Answer:
9.70 times
Explanation:
The formula and the calculation of the times interest earned ratio is computed below:
Times interest earned ratio = (Earnings before interest and taxes) ÷ (Interest expense)
where,
Earnings before interest and taxes = Net income after tax + interest expense + income tax expense
=$56,500 + $9,100 + $22,700
= $88,300
And, the interest expense is $9,100
Now place these values in the formula above,
so the ratio would be equal to
= $88,300 ÷ $9,100
= 9.70 times
<span>a.output always is above potential output.</span>
Answer:Substitution ---B
Explanation:
When goods are closely related together such that they both give similar purpose , they are called Substitute goods.
Therefore when any of the substitute goods prices rises, Consumers will go for the cheaper alternatives which will provide more value for thier money.
Here, the rise in the price of Pepsi caused consumers to shift to a cheaper alternative which is Coke. Other substitute goods that can have the Substitution effect include beef and chicken, butter and margarine etc
