Answer:
b. 16% defectives
Explanation:
Let the number of units shipped be N
Let the defect rate be y%
Cost of replacing defectives once shipped = (y/100)×N× 2.5 ........equation (1)
Cost of 100% inspection = N × 0.4 .........equation (2)
At the indifference point, both costs, that is the replacement cost and inspection cost are equal. Therefore, we make both equations (1) and (2) equal.
N × 0.4 = (y/100)×N× 2.5
100 × 0.4 = y ×2.5
y = 40/2.5 = 16
She is indifferent at 16% defectives
Answer:
CoffeeStop should use a WACC of 8.42%
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that a project must offer before it can be accepted.
<u>Calculation of WACC</u>
Capital Source Weight Cost Total
Debt 10 % 3.24% 0.32%
Equity 90% 9% 8.10%
Total 100% 8.42%
<u>Weight</u>
Note : CoffeeStop plans to finance 10 % of the new liquor-focused division with debt and the rest with equity
<u>Cost of Debt</u>
<em>WACC calculation considers the after tax cost of debt</em>
Cost of Debt = Market Interest Rate × (1-tax rate)
= 5.4 % × (1-0.40)
= 3.24%
<u>Cost of Equity</u>
Cost of Equity = Risk free rate + Beta × Market Premium
= 2.3 % + 6.7 %
= 9%
I would ask "how much is the initial investment" and "how long is the payback period of the project" before I decide which one to invest in. The IRR of both companies have already shown the return rate of the project, therefore knowing the period and the initial amount would be the best option<span>. This option related to our fund sufficiency and cash flow.</span>
The consumer price index (cpi) and the gdp deflator are designed to measure the degree to the cost of purchasing a bundle of goods has changed over time.
A customer is someone or a group who intends to order, or makes use of purchased goods, merchandise, or offerings basically for personal, social, own family, household and comparable desires, who is not at once related to entrepreneurial or enterprise activities.
A purchaser is the only who purchases the product for his/her own need and makes use of or consumes it. A patron can't resell the good, service or product however can eat it to earn his/her livelihood and self-employment. Definition of purchaser. The client is the one who is the stop-person of any items or services.
Learn more about consumer here:brainly.com/question/380037
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