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NNADVOKAT [17]
3 years ago
13

The calculation of WACC involves calculating the weighted average of the required rates of return on debt, preferred stock, and

common equity, where the weights equal the percentage of each type of financing in the firm’s overall capital structure. is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) equation. Avery Co. has $1.4 million of debt, $1.5 million of preferred stock, and $2.1 million of common equity. What would be its weight on common equity? 0.42 0.28 0.33 0.27
Business
1 answer:
Mars2501 [29]3 years ago
4 0

Answer:

The weightage of common equity will be 0.42

Explanation:

The weight of each component of financing to the firm is calculated by taking the market value of each component and dividing it by the total market value of the assets of the firm. Where assets = debt + equity

The total assets or value of capital structure for the firm is,

Assets = 1.4 + 1.5 + 2.1  = $5 million

The weightage of common equity in the capital structure is, 2.1 / 5  =  0.42 or 42%

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A firm has net income of $197,400, a return on assets of 8.4 percent, and a debt-equity ratio of .72. What is the return on equi
Karolina [17]

Answer:

C 14.45

Explanation:

Return on equity = .084 ×(1 + .72) = .1445, or 14.45 percent

8 0
2 years ago
On 12/31/X4, Zoom, LLC, reported a $55,500 loss on its books. The items included in the loss computation were $27,000 in sales r
IrinaVladis [17]

Answer:Ordinary Business income loss =-$20,500.

Explanation:

Ordinary business Expenses are the expenses generally accepted according to the  industry standards associated with running of a business.

Here, the ordinary business expenses for Zoom  include

cost of good sold= $19,-000

employee wages= $17,000

rent expense = $11,500 and therefore will be deducted from its sales revenue.

charitable contributions and qualified dividends, do not cut across all industries and so are not classified under Ordinary Buisness expences.

Ordinary Business income loss = Sales revenue - cost of good sold, -employee wages- rent expense.

$27,000- $19,000-$`17,000-$11,500= -$20,500. to be reported on its X4 return

6 0
3 years ago
Leno Company sells goods to the Fallon Company for​ $10,000. It offers credit terms of​ 2/10, n/30. If Fallon Company pays the i
Zinaida [17]

Answer:

Leno Company will record a debit to Cash in the amount​ of: D. ​$9,800

Explanation:

The terms of 2/10, n/30 means 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

Fallon Company pays the invoice within the discount​ period - early enough to receive a 2% discount. The discount amount is 2% x $10,000 = $200.

On the other hand, Leno Company has to offer a 2% discount to Fallon Company. Cash amount Leno Company receives = $10,000 - 2% x $10,000 = $9,800

Leno Company will record a debit to Cash in the amount​ of $9,800

6 0
3 years ago
The standard time for producing one unit of work in a job paying $12.75 per hour was set at twelve minutes. The piece rate would
aalyn [17]

Answer:

The right answer is option (A).

Explanation:

According to the scenario, given data is :

Time required for one unit = 12 Min

Payment for job =  $12.75 / Hour

So, payment for job per minute = $12.75 / 60 = $0.2125 / minute

Hence, Rate per piece = rate/minute × time required for one unit

= $0.2125 × 12

= $2.55

Hence the most appropriate answer is option (A).

7 0
3 years ago
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