1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kkurt [141]
3 years ago
7

Suppose your company needs $16 million to build a new assembly line. Your target debt−equity ratio is .7. The flotation cost for

new equity is 9 percent, but the flotation cost for debt is only 6 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company’s weighted average flotation cost, assuming all equity is raised externally?
Business
1 answer:
kumpel [21]3 years ago
4 0

Answer:

7.76%

Explanation:

The computation of the weighted average flotation cost is shown below:

= Weightage of equity × flotation cost for new equity +  Weightage of debt × flotation cost for debt

Since the debt-equity ratio is 0.7 which means the debt value is 7 and the equity value is 10 so the total firm would be 1.70

So, Weighted of debt = (0.7 ÷ 1.70) =0.411

And, the weighted of common stock = (Common stock ÷ total firm)

                                                              = (1) ÷ (1.70)

                                                              = 0.588    

Now put these values to the above formula  

So, the value would equal to

= (0.588 × 9%) + (0.411 × 6%)

= 0.05292% + 0.02466%

= 7.76%

You might be interested in
The task of securing all necessary personnel, space, and financing; supervising all production and promotion efforts; fielding a
Jlenok [28]

Answer:

producer

Explanation:

The producer of a movie, theater play, sitcom, etc., is the person in charge of securing everything that is needed in order for the movie, play, etc., to be properly carried out. That means he/she is responsible for gathering the necessary funds and paying salaries and all other expenses. The producer is also responsible for dividing the money generated by the movie, play, etc., and distributing it to the investors.

5 0
3 years ago
What is one specific requirement of a negotiable instrument?
Advocard [28]

Answer:

B

Explanation:

4 0
2 years ago
Soft drink sales are declining as more consumers are concerned about their health. This represents a change in the __________. A
Firlakuza [10]

Answer:

product concept

Explanation:

The definition of the product concept implies that customers prefer goods that have higher quality, price, and functionality than a standard product. In some niche markets such as computers and mobile phones, the definition is really true.

The product concept relates to a compulsory philosophy to provide the consumer with the best model possible according to need and requirement. A product is not sufficient on its own and needs the performance of many other market aspects such as advertising, shipping, sales, operation, etc.

6 0
3 years ago
A ________ management system often consists of modules such as budget planning, debt management, travel and expense management,
sergejj [24]

Answer:

Financial

Explanation:

Financial management refers to managing an organization or program's resources to meet it's goals and objectives as quickly as possible by making use of resources to carry out planned activities. A financial management system is the approach employed by an organization to govern its income, expenses and assets with the sole purpose of attaining sustability.

8 0
3 years ago
As a general rule, a product ________ strategy seems to work best when the consumer target market for the product is alike acros
vodomira [7]

Answer:

The correct answer is letter "B": product extension.

Explanation:

In International Business, product extension refers to the approach by which a  firm introduces its product or service across borders without shaping the product according to the profile of each consumer in each region. Product extension is implemented to expand the business operations of a firm in an attempt of finding new consumers in new markets, thus, generating more profit.

<em>Product extension is likely to work only if customers' preferences and necessities are the same in different countries.</em>

7 0
3 years ago
Other questions:
  • In 2005, Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship. Of the $600,000
    6·1 answer
  • 12. the market for rice in an east asian country has demand and supply given by Qd = 28 -4P and Qs = -12 + 6P, where quantities
    9·2 answers
  • When a firm initiates or increases a cash discount, the net effect on the accounts receivable investment is difficult to determi
    5·1 answer
  • If the Fed purchases $50,000 in T-bills from a bank, by how much will the bank's excess reserves increase: a) by $50,000. b) by
    14·1 answer
  • A variable cost a. is synonymous with labor costs b. changes in the same direction and in direct proportion to changes in operat
    12·1 answer
  • Suppose that the economy starts with a balanced budget: G = T. If the increase in G is equal tothe increase in T, then the budge
    8·1 answer
  • Ntex Ltd. issued 10,000, 10% Debentures of Rs.100 each at a premium of
    9·1 answer
  • In what way are mutual funds similar to common stocks
    11·1 answer
  • Need friends invite me will mark brainliest
    6·2 answers
  • Reflect on a time when you recently traded or bought an item. Describe this exchange, using the following economic terms: volunt
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!