1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
motikmotik
4 years ago
12

Klose outfitters inc. believes that its optimal capital structure consists of 60% common equity and 40% debt, and its tax rate i

s 40%. klose must raise additional capital to fund its upcoming expansion. the firm will have $2 million of new retained earnings with a cost of rs = 12%. new common stock in an amount up to $6 million would have a cost of re = 15%. furthermore, klose can raise up to $3 million of debt at an interest rate of rd = 10% and an additional $4 million of debt at rd = 12%. the cfo estimates that a proposed expansion would require an investment of $5.9 million. what is the wacc for the last dollar raised to complete the expansion?
Business
1 answer:
dsp734 years ago
6 0

Total amount to be raised = 5.9 Million

Equity (60%) =0.6* 5.9 Million= 3.54 Million

2 Million at 12%, next 1.54 Million at 15%

Debt (40%) = 0.4*5.9 Million = 2.36 Million

2.36 Million at 10%. After tax cost of debt =10%*(1-0.4) = 6%

WACC = 2/5.9*12% + 1.54/5.9*15% + 2.36/5.9*6% = 10.38%

WACC for the last dollar raised to complete the expansion = 10.38%

You might be interested in
What is financial accounting??<br><br>Any one help me ​
AfilCa [17]

Answer:

Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. ... Work opportunities for a financial accountant can be found in both the public and private sectors.

5 0
3 years ago
Read 2 more answers
Melina manages a team that is all remote. She wants to collaborate with her team to design and build a culture when working remo
Nitella [24]

The right answer is keep social exchanges proactive and with intent.

What are Social exchanges ?

  • Social exchange Proposition proposes that social behavior is the result of an exchange process.
  • The reason for this exchange is to increase benefits and less costs.
  • According to this proposition, people weigh the implicit benefits and pitfalls of their social connections. When the pitfalls overweigh the prices, they will terminate or abandon the relationship.

Most connections are made up of a certain quantum of give- and- take, but this doesn't mean that they're always equal.

Social exchange suggests that it's the valuing of the benefits and costs of each relationship that determine whether or not we choose to continue a social association.

Melina manages a platoon that's all remote. She wants to unite with her platoon to design and make a culture when working. So the suggestion to her and her team is to keep social exchanges proactive and with intent.

Learn more about Social exchanges here:

brainly.com/question/5660582

#SPJ4

4 0
2 years ago
Consider the following two countries. Assume they produce only these two goods. Note that productivity is now measured in how ma
Ainat [17]

Answer:

A. 1/3 computers

B. 0.6 computers

Explanation:

A. The opportunity cost incurred by the US to make cars is the number of computers it would have to give up to make a car.

The US can either make 12 cars or 4 computers. For every car made therefore the US forgoes;

= 4/12

= 1/3 computers.

B. The same logic applies to Japan. They can either make 10 cars or 6 computers.

Their opportunity cost for cars is therefore;

= 6/10

= 0.6 computers

5 0
3 years ago
Rugged Bicycles, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If
damaskus [11]

Answer:

$412,500

Explanation:

March

Cash receipts from sales on account for April = $400,000 * 75%

Cash receipts = $300,000

April

Cash receipts from sales on account for April = $450,000 * 25%

Cash receipts = $112,500

Total Cash receipts = Cash receipts from sales on account from March + Cash receipts from sales on account from April

Total Cash receipts = $300,000 + $112,500

Total Cash receipts = $412,500

5 0
3 years ago
All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.
Irina18 [472]

All of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead (MOH) ----- False.

What is considered manufacturing overhead?

Manufacturing overhead (MOH) cost is the sum of all the indirect costs which are incurred while manufacturing a product. It is added to the cost of the final product along with the direct material and direct labor costs.

What does manufacturing overhead include?

Manufacturing overhead includes indirect materials, indirect labor, depreciation on factory buildings and machines, and insurance, taxes, and maintenance on factory facilities. Costs that are a necessary and integral part of producing the finished product.

. Direct labor :

Is the cost of the workers who make the product. The cost of supervisory personnel, management, and factory maintenance workers, although they are needed to operate the factory, are classified as indirect labor because these workers do not use the direct materials to build the product.

Learn more about company's depreciation :

brainly.com/question/1055905

#SPJ4

7 0
1 year ago
Other questions:
  • Rasheed works for Company A, earning $299,000 in salary during 2019. Assuming he is single and has no other sources of income, w
    11·1 answer
  • The _____ of an ad is defined as being the average number of times a person must see or hear a message before it becomes effecti
    7·1 answer
  • Do checks expire if they are not cashed?
    8·1 answer
  • he initials GAAP stand for a. Generally Accepted Accounting Principles b. Generally Accepted Accounting Practices c. General Acc
    7·1 answer
  • As an advertising executive, Madison understands that people are caught up by information that is moving, blinking, flashing, or
    10·1 answer
  • A company reports the following information for Year 1: Sale of equipment $20,000 Issuance of the company’s bonds 10,000 Dividen
    13·1 answer
  • Bella Bags is a British company that sells luxury leather purses manufactured in London. Currently, its products are carried at
    15·1 answer
  • Describing Work Activities for Financial Analysts Click this link to view O*NET’s Work Activities section for Financial Analysts
    10·2 answers
  • When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the
    12·1 answer
  • A company reported the following information for its most recent year of operation: purchases, $114,000; beginning inventory, $2
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!