Answer:
$22,040
Explanation:
The operating income using absorption costing is find out by using the following equation
Sales revenue $69,600 (580 units × $120)
Less:
Direct material cost $2,900 (580 units × $5)
Direct labor cost $16,820 (580 units × $29)
Variable manufacturing overhead $5,800 (580 units × $10)
Fixed manufacturing overhead $12,180
Variable selling and admin cost $1,740 (580 units × $3)
Fixed selling and admin cost $8,120
Operating income using absorption costing $22,040
We simply deduct the all cost from the sales so that the operating income under absorption costing could come
Answer:
B) $90,000
Explanation:
Distribution of appreciated property to the stockholders of an S Corporation are taxable, and must be recorded at fair market value. In this case, Zachariah is the only stockholder, but the same rule applies. Zachariah's taxable gain = fair market value - stock basis = $100,000 - $10,000 = $90,000.
Answer and Explanation:
The computation is shown below:
Debt = D ÷ (E + D)
= 0.8 ÷ (1 + 0.8)
= 0.4444
Now
Weight of equity = 1 - Debt
= 1 - 0.4444
= 0.5556
As per Dividend discount model
Price = Dividend in 1 year ÷ (cost of equity - growth rate)
40 = $2 ÷ (Cost of equity - 0.06)
Cost of equity = 11%
Cost of debt
K = N
Let us assume the par value be $1,000
Bond Price =∑ [(Annual Coupon) ÷ (1 + YTM)^k] + Par value ÷ (1 + YTM)^N
k=1
K =25
$804 =∑ [(7 × $1000 ÷ 100)/(1 + YTM ÷ 100)^k] + $1000 ÷ (1 + YTM ÷ 100)^25
k=1
YTM = 9
After tax cost of debt = cost of debt × (1 - tax rate)
= 9 × (1 - 0.21)
= 7.11
WACC = after tax cost of debt × W(D) + cost of equity ×W(E)
= 7.11 × 0.4444 + 11 × 0.5556
= 9.27%
As we can see that the WACC is lower than the return so it should be undertake the expansion
