A place to open the shop because a capital resource is a good that is used to make other goods.
Answer:
Cost of equity capital can be found by the Capital asset pricing model:
Cost of capital
= Risk free rate + beta * market premium
= 2% + 0.8 * 10%
= 10%
Weighted Average Cost of Capital:
= (weight of debt * after tax cost of debt) + (weight of stock * cost of stock)
= (50% * 8% * ( 1 - 34%)) + (50% * 10%)
= 10.28%
Answer:
(a)overstated
(b)overstated
(c)no effect
Explanation:
(a) As there is an expense account (utilities expense) which, is not included in the income statement, result for the year will be higher than if was.
(b)The revenues account will be oaky. But, the total expenses will be lower, as there are cost of the period which are not included.
So the Net incoem will be higher than a correct income as their expenses do not include this utilities expense
(c) The balance sheet will have no effect in the total Asset or Total Liaiblities+SE but, it is a change in the composition.
The income (reained earnings) should be lower as the income will be lower and a liability will be create (utilities payable) to fill this so:
with the mistake:
liab 0 equity (+400)
ammending the mistake
liab 400 equity 0
the net effect is zero.
It will decrease equity and increase liability, but the su of both will be the same
Answer:
This firm should hire less of C and more of D
Explanation:
Based on the information given we were told that the price of resource C is the amount of $90 while the price of resource D is the amount of $35 ,Therefore based on this it will be advisable for the firm to hire less of C and More of D because the price of resource is C is more higher than the price of resource D when compared, which means that the price of resource D is the best option or alternative for the firm to go for.
Answer:
11.18%
Explanation:
The firm average cost of equity is shown below:
Under Dividend growth, the common stock is
= dividend growth rate + dividend yield
= 3.75% + 4.53%
= 8.28%
Under CAPM, the common stock is
= Risk-free rate of return + Beta × (Market rate of return - risk-free rate of return)
=3.1% + 1.15 × (12.65% - 3.1%)
= 14.08%
Now the average cost of equity of the firm is
= (8.28% + 14.08%) ÷ 2
= 11.18%
