405,000
HOPE THIS HELPS!!!!!!! ;-)
Answer:
Ford's weighted average cost of capital is 8.22 %
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that the company expect from a project. It shows the risk of the company.
Calculation of WACC
WACC = Cost of equity + Cost of preferred stock + Cost of debt
Capital Source Market Values Weight Cost Total Cost
equity $ 7 billion 29.17% 13.6% 3.97 %
preferred stock $ 2 billion 8.33% 12% 1.00 %
debt $ 15 billion 62.50% 5.2 % 3.25%
Total $ 24 billion 8.22 %
Cost of equity = Risk free rate + Beta × Risk Premium
= 4% + 1.2 × 8%
= 13.6%
Cost of preferred stock = Dividend/Market Price
= $ 3/ $ 25 × 100
= 12%
Cost of debt = interest × (1- tax rate)
= 8% × (1-0.35)
= 5.2 %
Answer:
C. the greater the value of the multiplier
Explanation:
As we know that
The formula to compute the Government spending multiplier is shown below:
Government spending multiplier = 1 ÷ (1 - marginal propensity to consume)
where,
Marginal propensity to consume refers to the change in consumption with regard to the change in income
So if the value of the marginal propensity to consume is higher than there would also increase in the value of the multiplier and in the same proportion it would be greater
