Answer:
The firm's optimal capital structure is 80% Debt and 20% Equity.
The WACC at this optimal capital structure is 10.28%.
Explanation:
Note: See the attached excel file the computation of the weighted average cost of capital (WACC) at the optimal capital structure. Also note that the data in the question are merged together but they are sorted in the attached excel file before answering the question.
The optimal capital structure of a firm can be described as a combination of debt and equity financing that is the beat in which market value of the firm is maximized while its cost of capital is minimized.
Using the weighted average cost of capital (WACC), the optimal capital cost capital structure occurs at a point where the WACC is the lowest.
From the attached excel file, the lowest WACC is 0.1028, or 10.28%. At this firm Market Debt- to-Value Ratio (wd) which is debt is 0.80 (i.e. 80%), and Market Equity-to-Value Ratio (ws) which is equity is 0.20 (i.e. 20%).
Therefore, the firm's optimal capital structure is 80% Debt and 20% Equity.
The WACC at this optimal capital structure is 10.28%.
Answer:
2. raises interest rates, causing aggregate demand to shift to the right.
Explanation:
Expansionary Fiscal Policies try to increase Aggregate demand by :-
- Decrease in taxes by government ; or / and
- Increase in government spending
The government injecting more money in public : by reduced taxes & increased govt spending - increases the aggregate demand .
The government finances this increased public spending with same or decreased taxes - through borrowings.
The government borrowing funds reduces the loanable funds in capital market, this loans' excess demand in capital markets increase their price i.e Interest.
<u>Full question:</u>
There are approximately 1 billion people living in India. Only about 200 million of these people earn more than the equivalent of $1,000 per year. According to Maslow's hierarchy, most of the other 800 million Indian consumers are primarily addressing their __________ needs.
a. social
b. esteem
c. psychological
d. physiological
e. Personal
<u>Answer:</u>
According to Maslow's hierarchy, most of the other 800 million Indian consumers are primarily addressing their physiological needs.
<u>Explanation:</u>
Abraham Maslow's 'Hierarchy of Needs' offers a five-stage design of the impulses following human behavior. At the base of this hierarchy endure our primary, survival-ensuring necessities, which Maslow pointed to as our physiological needs. If certain needs are not convinced the human body cannot function optimally.
The primary physiological needs are fairly apparent—these cover the items that are essential to our survival. To progress over the other stages of the hierarchy, we necessity primary perform these primary needs.
Answer:
The cost of the company’s preferred stock financing is 15.7%
Explanation:
In this question, we are asked to calculate a company’s cost of preferred stock financing.
Firstly, we calculate the annual dividend of the company.
Mathematically, that is equal to dividend rate * par value
From the question, dividend rate is 16% while par value is $75
Thus, Annual dividend is 16/100 * 75 = $12
To get the cost of preferred stock, we employ a mathematical approach.
Mathematically, cost of preferred stock = Annual dividend/(current price - floatation cost)
From the question, current price is $80 while the floatation cost is $3.5 per share.
Cost of preferred stock = 12/(80-3.5)
= 12/76.5 = 0.157
This is same as 15.7%
B) Family child care <span>refers to care of a child in someone else's home. This is like a day-care that exists in someone's place of residence. Usually there are a number of children enrolled at once, and the care-taker makes the home more suitable to the purpose, ensuring child safety and that there are plenty of activities to stimulate the children.
</span>
