Answer:<em>True cost =
</em>
<em>=
</em>
<em>= $ 13,669,821.2</em>
Explanation:
Given :
Debt-Equity ratio = 0.55
Flotation cost for new equity = 6%
Flotation cost for debt = 3 %
∴ To compute the weighted flotation cost , we'll use the following formula:
Weighted Flotation cost =![\left [ \frac{1}{1+Debt-Equity ratio}\times Flotation cost of equity \right ] + \left [ \frac{Debt-Equity ratio}{1+Debt-Equity ratio}\times Flotation cost of debt \right ]](https://tex.z-dn.net/?f=%5Cleft%20%5B%20%5Cfrac%7B1%7D%7B1%2BDebt-Equity%20ratio%7D%5Ctimes%20Flotation%20cost%20of%20equity%20%5Cright%20%5D%20%2B%20%5Cleft%20%5B%20%5Cfrac%7BDebt-Equity%20ratio%7D%7B1%2BDebt-Equity%20ratio%7D%5Ctimes%20Flotation%20cost%20of%20debt%20%5Cright%20%5D)
= ![\left [ \frac{1}{1+0.55}\times 0.06 \right ] + \left [ \frac{0.55}{1+0.55}\times 0.03 \right ]](https://tex.z-dn.net/?f=%5Cleft%20%5B%20%5Cfrac%7B1%7D%7B1%2B0.55%7D%5Ctimes%200.06%20%5Cright%20%5D%20%2B%20%5Cleft%20%5B%20%5Cfrac%7B0.55%7D%7B1%2B0.55%7D%5Ctimes%200.03%20%5Cright%20%5D)
= 0.0387 + 0.0106
= 0.04934 or 4.93%
The true cost of building the new assembly line after taking flotation costs into account is evaluated using the following formula :
True cost = 
= 
= $ 13,669,821.2
If terry's total utility is maximized when he owns 10 pairs of shoes, then terry's total utility from owning 7 pairs of shoes is less than terry's total utility from owning 8 pairs.
The benefit that a person receives from consuming all of a given commodity's units at once or over time is referred to as their total utility.
In other terms, total utility is the overall satisfaction attained through the consumption of numerous units of commodities and services. Every unit of a commodity has a marginal utility, which is a benefit gained from consuming an extra unit. The total utility is the total of all these marginal benefits.
The consumer tries to consume various combinations of products and services within the available restricted resources (money) in order to optimise his overall utility. Generally speaking, individuals try to get the most out of the money they spend on goods and services.
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Answer:
a. Allowance for doubtful accounts = Unadjusted balance + Adjusted balance
= $10,500 + $110,000
= $120,500
b. i)The adjusted balance of accounts receivable shall be $2,150,000(adjusted debit balance)
ii) Adjusted balance = Bad debt expense - Unadjusted balance
= $120,500 - $10,500
= $110,000 (Adjusted credit balance)
iii) Adjusted bad debt expense = Unadjusted balance of allowance for doubtful accounts + Adjusted balance allowance for doubtful accounts
= $10,500 + $110,000
= $120,500 (Adjusted debit balance)
c. Net realizable value = Gross accounts receivable - Allowance for doubtful accounts
= $2,150,000 - $110,000
= $2,040,000