Ezra runs a gyro stall at the local farmers' market. he would like to expand and open his own shop downtown. he has made the cha
rt above, listing some potential costs and benefits of expansion. if ezra decides not to expand, what will be an opportunity cost of his choice?
1 answer:
If the missing chart is the chart in my attachment, Ezra's opportunity cost if he decides not to expand is most likely the 4TH BENEFIT which is MAKE AND SELL MORE FOOD ITEMS.
I chose that option among the benefits because it is the benefit that clearly translates into dollar values by being potential sales revenue. If Ezra gives up the idea of expanding, he will lose his potential sales or the opportunity to sell and gain more profit.
I chose that option among the benefits because it is the benefit that clearly translates into dollar values by being potential sales revenue. If Ezra gives up the idea of expanding, he will lose his potential sales or the opportunity to sell and gain more profit.
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Answer:
Cost of capital = 12.40%
Explanation:
given data
cost of equity = 15.4 percent
pretax cost of debt = 8.9 percent
debt-equity ratio = 0.46
tax rate = 34 percent
to find out
What is the cost of capital for this project
solution
first we get Equity multiplier that is express as
Equity multiplier = 1 + debt-equity ratio ..................1
put here value
Equity multiplier = 1 + 0.46
Equity multiplier = 1.46
and
Weight of equity will be
Weight of equity = ....................2
put here value
Weight of equity =
Weight of equity = 0.6849
and
Weight of Debt will be here
Weight of Debt = 1 - weight of equity ...........................3
put here value
Weight of Debt = 1 - 0.6849
Weight of Debt = 0.3151
so
Cost of capital will be here as
Cost of capital = Weight of Debt × pretax cost of debt × (1- tax rate ) + cost of equity × Weight of equity .....................4
put here value we get
Cost of capital = 0.3151 × 8.9% × (1 - 0.34) + 15.4% × 0.6849
Cost of capital = 12.40%