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3 years ago

The term applied to the periodic expiration of a plant asset's cost is

1 answer:

4 0

<span>The term applied to the periodic expiration of a plant asset's cost over its life in a balanced and orderly way is depreciation. It is not process for valuation nor is process that results in gathering of cash. Land expenses are not subject to depreciation.</span>

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You have the following data on The Home Depot, Inc. Market value of long-term debt: $20,888 million Market value of common stock

Phantasy [73]

Answer:

Expected rate of return on equity under the new capital structure is 9.75 %

Explanation:

given data

Market value of long-term debt = $20,888 million

Market value of common stock = $171,138 million

Beta = 1.04

Yield to maturity at 10 year t = 2.167%

Expected return on equity = 8.895%

Marginal tax rate t = 35%

solution

we get here cost of unlevered equity by the cost of levered equity formula that is

cost of levered equity = rSU + (rSU-rD) × (1-t) × (D÷S) .................1

here rSL is cost of levered equity and rSU is cost of unlevered equity and rD is before tax cost of debt and D is value of debt and S is value of equity.

put here value and we will get

8.895% = rSU + (rSU-2.167%) × (1-35%) × (20,888÷171,138)

solve it we get

rSU = 0.084005

cost of unlevered equity = 8.40 %

and

cost of levered equity for new capital structure will be

put here value in equation 1

cost of levered equity = 8.40 + (8.40-2.376%) × (1-35%) × ( 20 ÷ 80 )

cost of levered equity = 9.75 %

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3 years ago

What is the typical relationship between time and interest rate? a. Longer time period usually equals higher interest rates. b.

murzikaleks [220]

The answer is a, the more you wait to get you money back the more you charge in interest, you have to be paid to wait.

3 0

3 years ago

Company A, a British manufacturer, wishes to borrow US dollars at a fixed rate of interest. Company B, a US multinational, wishe

Sever21 [200]

Answer:

Company b 11.0 % 7.o%

Explanation:

Is this ok

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3 years ago

Who most likely actually pays the tax on rental property?

LiRa [457]

landlord jk

Explanation:

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2 years ago

Read 2 more answers

L Corporation produces and sells 13,800 units of Product X each month. The selling price of Product X is $20 per unit, and varia

Ray Of Light [21]

Answer:

It will be a financial disadvantage of 52,800

Explanation:

Continued Discontinued Differential

Sales 276000 - -276,000

Variable -193,200 - 193,200

Fixed -30,000 - 30,000

Allocate cost -73000 -73000 -

Result - 20,200 -73,000 -52,800

We compare each alternative:

if discontinued only the allocate cost will remain.

but we also loss the contribution of the product sales.

Sales 13,800 x 20

Variable 13,800 x 14

Tracable Fixed total fixed cost - unavoidable fixed cost

103,000 - 73,000 = 30,000

Allocate 73,000

Once we got the number we plug into the table and calcualte the differential income.

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4 years ago