B. <span>Since the new branch is adding expenses, Sam's net profit margin will go down.</span>
The after-tax cost of debt is 6.28%. Subtract a company's effective tax rate from one and multiply the difference by its cost of debt to calculate its after-tax cost of debt.
<h3>What is After-tax cost?</h3>
- After-tax cost denotes the actual costs less an amount equal to the combined federal and state income tax savings relating to the deductibility of said costs for federal and state tax purposes in the year in which such costs are incurred.
- WACC represents a company's average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt.
- WACC is the average interest rate that a company anticipates paying to finance its assets. The pre-tax cost of debt must be tax-affected because interest is tax-deductible, effectively creating a "tax shield" that is, interest expense reduces a company's taxable income (earnings before taxes, or EBT).
Therefore,
The after-tax cost of debt is 6.28%.
FV = -$1,000
PMT = -$100
N = 20 years
PV = $1,098 before including flotation costs; $1,098×(1-.05) = $1,043.10 after including flotation costs.
Compute I/Y = 9.511%
After-tax cost of debt = 9.511%×(1-.34) = 6.28%
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Answer:
the answer is b) direct materials, direct labor, and manufacturing overhead.
Explanation:
direct materials - the materials and supplies used to create a product. (wood used to make a table)
direct labor- the labor and service implemented in the process of delivering finished goods. (hours spent on crafting the table)
manufacturing overhead- any indirect costs involved in the production of the product.
Answer:
$38.375
Explanation:
In this question, we apply the Gordon model which is shown below:
Maximum price = Next year dividend ÷ (Required rate of return - growth rate)
= $6.14 ÷ 0.16
= $38.375
We simply divide the dividend rate by the required rate of return so that the accurate and maximum price can come. The growth rate is not given so we do not consider it.
