During the process of operational planning, management must compare market demand with Capacity.
Capacity refers to the company's ability to fulfill the amount of demand that exist for the products. If a company has a lot of orders without the ability to fulfill it, they will not be able to rake in the profit from the market.
The expenditure method is the most widely used approach for estimating GDP, which is a measure of the economy's output produced within a country's borders irrespective of who owns the means to production. The GDP under this method is calculated by summing up all of the expenditures made on final goods and services.
Answer:
a)
Pre-tax Cost Of Debt = 7.64%
b)
Tax Rate = 40%
Post Tax cost of debt = 7.33% * (1 - 40%) = 4.58%
So Post Tax cost of Debt = 4.58%
Explanation:
Bond Par Value = 12,900,000
Bond Market Price 93% of face value = 11,997,000
Years To maturity = 5.00
Annual Interest 5.9% = 761,100
Formula = [Annual Interest + (Par Value-Market Value) / Years to Maturity] / [(Par value+Market Price*2)/3]
Year To Maturity = [761100 + (12900000 - 11997000) / 5] / (12900000 + 2*11997000) / 3
Year to maturity = 7.33%
