Answer:
B. <u>the weighted average cost of capital is minimized </u>
Explanation:
As per the traditional capital structure theory, as a firm employs more and more debt in it's capital structure, the financial leverage increases and since debt being a cheaper source of finance than equity with interest paid on debt being a tax deductible expense, the overall cost of capital initially falls.
As the firm further keeps increasing the proportion of debt, such debt raises the expectations of equity stockholders which raises the cost of equity and thus the overall cost of capital begins to rise.
An optimal capital structure under the theory refers to the one at which, overall cost of capital or the weighted average cost of capital of the firm is the lowest and value of the firm is the highest.
Answer:
option (B) 0.012634
Explanation:
Data provided in the question:
Expected return Probability
16.5% 80%
-11.6% 20%
Now,
Mean return = ∑( Probability × Expected return )
= ( 0.8 × 16.5% ) + ( 0.2 × (-11.6%) )
= 13.2% - 2.32%
= 10.88%
Thus,
Variance = ∑(Probability × [ Expected return - Mean return ]² )
= 0.8 × ( 16.5% - 10.88% )² + 0.2 × ( -11.6% - 10.88% )²
= 0.8 × ( 5.62% )² + 0.2 × (-22.48%)²
= 0.8 × 0.0562² + 0.2 × 0.2248²
= 0.002526752 + 0.010107008
= 0.01263376 ≈ 0.012634
Hence,
The correct answer is option (B) 0.012634
Answer:
Accrual Principle
Explanation:
The accrual principle is when a transaction is recorded in the time period that it occurs. In this case, recording a Friday transaction on Friday.
LIFO uses the last unit costs for Cost of Goods Sold on the income statement and the first unit costs for Inventory on the balance sheet.
<h3>What is LIFO?</h3>
LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.
For example, if beginning inventory consists of 10 units at $10 per unit. In the middle of the month, 10 units were bought at $15 per unit. At the end of the month, 10 units were sold. Using LIFO, the cost of goods sold would be $150 ( 10 x 15). Ending inventory would be $100 ($10 x 10).
To learn more about LIFO, please check: brainly.com/question/13779572
The option that falls outside of the classification of business expenditures that fall into the category of variable costs is option C. costs of research and development. Read below about costs of research and development.
<h3>What is a costs of research and development?</h3>
These are costs taken to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expensed immediately when the costs are incurred.
Therefore, the correct answer is as given above.
learn more about costs of research and development: brainly.com/question/18685415
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