Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%
Answer:
a. The depreciable cost is $72000.
b. The depreciation rate is $0.36 per mile.
c. The depreciation expense for the year is $6480.
Explanation:
a.
The depreciable cost is the cost that is eligible for depreciation. It is calculated by deducting the residual value from the cost of the asset.
Depreciable cost = Cost - residual value
Depreciable cost = 80000 - 8000 = $72000
b.
The depreciation rate can be calculated by dividing the depreciable cost by the total estimated useful life of the asset.
The depreciable rate = 72000 / 200000 = $0.36 per mile driven
c.
The units of activity depreciation for the year is,
Depreciation expense = 0.36 * 18000 = $6480
Dividend per share= 8% of 100 = 8
for 500 share its 8 multiply by 500 = 4000
Normally the annual dividend amount is stated as a percentage of the par value, which is the original asking price of the stock
((dividend yields: Yield is the effective interest rate you receive if you buy shares of the preferred stock.
The yield is equal to the annual dividend divided by the current price.
in this case
dividend yield is 8 divided by 120
answer= 0.067= 6.7%))
<span>Conflict
of interest is a very big issue when it comes to business because it may cause
wrong decisions. For example, you are business partners and each one of you
have different interests and ideas, thus you will not be able to formulate
better ideas and create a good business product. It is very important that in a
business, you and your business partner must agree in 1 idea and push it
through until it become a good product.</span>
