I think it woul be better off. Exporting goods makes more money that importing them because you are making goods to be sold in other countries. Importing goods from other countries generally means people have to spend more due to shipping and handling.
The demand for the coffee will decrease with the rise in the fee because of decrease in the money in hand of the student.
<u>Explanation:</u>
Demand of a particular product is related to many factors. Some of the factors affecting the demand of a good are price of the good, income of the consumers, taste, fashion, availability of substitutes and so on.
In the above given example, since with the rise in the tuition and the fee of the student, the money in the hand of the student decreases, so he will have less money to spend. Therefore the demand of the coffee will also decrease with this increase.
Answer:
WACC is 9.35%
Explanation:
In order for us to compute the weighted average cost of capital, we have to first find the cost of equity (Ke) and the cost of debt (Kd)
1. Ke can be found by using CAPM - Capital Asset Pricing Model.
CAPM Formula: Ke = Rf + b(Rm-Rf)
where Rf = Risk free rate; Rm = Return expected of the market; b = beta
Therefore = Ke = 3% + 0.9(11%-3%) = 10.2%
2. Kd = Coupon rate (1 - tax rate), coupon rate is 7%, tax rate is 35%
therefore Kd = 7 (1-0.35) = 4.35%
Lastly we apply the WACC Formula which is Ke* (equity value/Total value of equity and debt) + kd*(debt value/Total value of equity and debt)
We are not given the values of equity and debt, bur we are given the fractions; we will use the fractions.
Therefore: Ke* (equity value/Total value of equity and debt) + kd*(debt value/Total value of equity and debt) = (10.2%*85%)+(4.35%*15%) = 9.35%
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Answer: C. $10,000
Explanation:
Proportional tax system means you pay a certain percent of what you earn, in this case it is 25%. Therefore your friend making twice as much as you will be taxed twice as much as you, making the answer C. $10,000.
