On November 1, 2016, Blossom Company places a new asset into service. The cost of the asset is $73000 with an estimated 10-year
1 answer:
You might be interested in
Answer:
0.4766
Explanation:
Given:
WACC = 9.7%
Company’s cost of equity = 12%
Pretax cost of debt = 7.5%
Tax rate = 35%
Now,
WACC
= Weight × Cost of equity + (1 - weight) × Pretax cost of debt × (1-tax rate)
or
0.097 = weight × 0.12 + ( 1 - weight ) × 0.075 × (1 - 0.35)
or
0.097 = 0.12 × weight + 0.04875 - 0.04875 × weight
or
0.04825 = 0.07125 × weight
or
weight = 0.6772
also,
weight =
or
=
or
=
+ 1
or
1.4766 = + 1
or
= 0.4766
Answer:
From zero to 33 boats option B would be best
Explanation:
Assuming the first alternative (A)is 250,000 fixed and 500 per boat
second (B) 2,500 cost per boat
and third (C) 50,000 fixed and 1,000 cost per boat
We want' to know at which level B would be the best option
we want to know when alternative C or A have a cost of 2,500 or lower:
A:
Q = 125
From this point, as fixed cost will be distribute among more units, the cost will decrease meaking C better than B
C:
Q = 33.33
From this point, as fixed cost will be distribute among more units, the cost will decrease meaking A better than B
From zero to 33 boats option B would be the best of the three options