Answer: 9.7%
Explanation:
Given Data
Rf = Risk free return = 6%,
Rpm = Risk premium = 4%,
Beta = 0.9
Wd = Debt = 20%
rd = cost of debt = 8%
We = equity = 80%
Re = Rf + Beta (Rpm)
= 0.06 +0.9 (0.04)
= 0.096 * 100
= 9.6%
Unlevered Equity Cost ;
ReU= Wd × rd + We × re
= 0.20 × 8% + 0.80 × 9.6%
= 9.28%
Levered Equity Cost:
New Debt = 60%,
New Equity = 40%,
New rd = 9%
ReL = ReU + (ReU - rd) (D ÷ E)
= 9.28% + (9.28% - 9%) (0.60 ÷ 0.40)
= 0.097 * 100
= 9.7%
The standardized deficit <span>is the difference between annual government expenditures and revenues.
This calculation is made on the assumption that the market is on full employment. The difference between expenditures and revenues in this matter could be used to determine whether the government has run its operations efficiently or not.</span>
It should be noted that Jessie is into a Distribution business when she sells souvenirs and craft items to tourists in Myrtle Beach, South Carolina.
<h3>What is Distribution business all about?</h3>
Distribution in business can be regarded as an activity of both selling and delivering products and services from manufacturer to customer.
It often called product distribution and it helps to ensure that customers and all members of the distribution channel are happy.
Learn more about Distribution business at:
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