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Answer:
WACC = 12.040%
Explanation:
WACC represents weighted average cost of all sources of financing. In the question there are three sources of finance 1) Equity 2) Preferred Stock 3) Debt.
1) Equity: The firm intends to raise $ 320,000 from equity out of total financing of $ 570,000 e.g. 56% of total financing comes from Equity. Thus multiplying the cost of equity 14.7% (given) with ratio of equity financing, we get to weighted average cost of equity of 8.253%.
2) Debt: The firm is raising $ 230,000 from debt e.g. 40% of total financing. The proportion of debt is multiplied by post tax cost of debt as the interest expense is deductible expense for tax purposes in most of the jurisdiction. Therefore we reduce the cost of debt with element of (1 - tax rate), thus we get to 8.325% = 11.1 (1 - 25%) as total cost of debt. In order to get weighted average cost of debt we multiply this post tax cost of debt with ratio of debt financing 40%, thus weighted average cost of debt is 8.325 * 40% = 3.359%
3) Preferred Stock: The firm is also raising finance from preferred stock having cost of 12.2%. Proportion of financing from preferred stock is 4% in total mix of financing, thus weighted average cost of preferred stock is 12.2% * 4% = 0.428%.
Now adding weighted average cost of all three sources of funding, we get WACC: 8.253% + 3.359% + 0.428% = 12.040%
The average total cost of the firm is $75.
<h3>What is the average total cost of the firm?</h3>
The average total cost is the sum of the average fixed cost and the average variable cost.
The average total cost = average fixed cost + average variable cost
$25 + $50 = $75
To learn more about fixed cost, please check: brainly.com/question/27127934
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Answer:
$21.44
Explanation:
Calculation for the cost per equivalent unit for materials for the month in the first processing department
First step
Units completed and transferred out $7,500
Ending inventory($800+$8,400-$7,500)*70% Ending inventory =1,700*70%
Ending inventory =$1,190
Equivalent units for Materials $8,690
($7,500+$1,190)
Total materials costs $186,300
Second step
Cost per equivalent unit for materials=Total materials costs÷ Equivalent units for Materials
Cost per Equivalent unit for Materials $186,300÷$8,690
Cost per Equivalent unit for Materials=$21.44
Therefore the cost per equivalent unit for materials for the month in the first processing department is closest to $21.44