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3 years ago

On a per unit basis, economic profit can be determined as the difference between:

1 answer:

6 0

The product price and the average total cost determines the profit. If a company is charging a higher price than the per-unit cost, then they are earning a profit on that item. If they increase the price with everything else remaining constant, their profit increases. The opposite happens when they lower the price, all else held constant.

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Problem 14-13 Calculating the WACC [LO3] Dinklage Corp. has 4 million shares of common stock outstanding. The current share pric

sleet_krkn [62]

Answer:

WACC = 8.97%

Explanation:

total value of equity = $70 x 4,000,000 = $280,000,000

cost of equity:

$70 = $4.4935 / (Re - 4.5%)

Re - 4.5% = 6.42%

Re = 10.92%

total value of debt:

$75 million x 0.95 = $71,250,000

YTM = {70 + [(1,000 - 950)/25]} / [(1,000 + 950)/2] = 72 / 975 = 7.3846%

$60 million x 1.07 = $64,200,000

YTM = {60 + [(1,000 - 1,070)/8]} / [(1,000 + 1,070)/2] = 51.25 / 1,035 = 4.9517%

weighted cost of debt = ($71,250,000 / $135,450,000 x 7.3846%) + ($64,200,000 / $135,450,000 x 4.9517%) = 3.8845% + 2.347% = 6.2315%

total value of the firm = $280,000,000 + $135,450,000 = $415,450,000

equity weight = $280,000,000 / $415,450,000 = 0.674

debt weight = 1 - 0.674 = 0.326

WACC = (0.674 x 10.92%) + (0.326 x 6.2315% x 0.79) = 7.36% + 1.605% = 8.965% = 8.97%

8 0

3 years ago

A bank has $8,000 in deposits and $6,000 in loans. it has loaned out all it can given the reserve requirement. it follows that t

True [87]

The reserve requirement, which is also referred to as the cash reserve ratio, is 25 percent. This is calculated by subtracting the $6,000 loaned out from the bank's $8,000 in deposits, yielding a reserve of $2,000. The reserve requirement is calculated by dividing $2,000 by $8,000.

4 0

3 years ago

80 points! Please help!! You have been invited to give a speech at a local restaurant. The person who is hosting the event has a

lesya [120]

Answer:

I would think about what I could use to get my audiences attention and something that would be interesting for everyone so that everyone can learn something.

Explanation:

5 0

3 years ago

Bob manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of ti

Kitty [74]

Answer:

A. Menu Cost

Explanation:

7 0

3 years ago

In reviewing the agreement between AdCreate and Anchor Motors, Jacob Stein found that sales ofAnchor rose 2.8% compared to the p

kakasveta [241]

Answer:

AdCreate billed Anchor Motors $529,412 for the third quarter in 2010

Explanation:

The advertizing company usually takes a 15% commision

Which means from the total amount billed to customer 15% ar commision which means:

money paid to media + 15% comission of the billed amount= total amount billed

450,000 + 0.15X = X

Now, we try to solve for X and get the amount billed to anchor motors.

X = 450,000/.85 = 529.411,76

8 0

3 years ago