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Alexandra [31]
3 years ago
12

Johansen Corporation has a target capital structure of 60 percent common stock and 40 percent debt. Its cost of equity is 14 per

cent, and the cost of debt is 8 percent. The relevant tax rate is 30 percent.What is the company's WACC?
Business
1 answer:
Dmitry_Shevchenko [17]3 years ago
8 0

Answer:

10.64%

Explanation:

The computation of the WACC is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of  common stock) × (cost of common stock)

= (0.40 × 8%) × ( 1 - 30%) +  (0.60 × 14%)

= 2.24% + 8.4%

= 10.64%

Simply we multiply the weightage with its capital structure so that the Accurate weighted cost of capital can be calculated

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Explain why the marginal revenue curve facing a competitive firm differs from the marginal revenue curve facing a monopolist. un
ycow [4]

The correct answer to this question is that:

In a monopoly, “the monopolist must lower the price on all units to sell one more unit of output”.

This means that in a monopoly market, if we increase the amount of output without lowering the price, the marginal revenue decreases. Therefore marginal revenue is indirectly proportional to number of outputs.

In a perfect competition however, the marginal revenue is constant to any amount of output.

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8 0
3 years ago
Larkin Co. has owned 25% of the common stock of Devon Co. for a number of years, and has the ability to exercise significant inf
andrew11 [14]

Answer:

C) $250,000

Explanation:

Larkin's investment in Devon at the end of the year = carrying amount at the beginning of the year + Larkin's share of Devon's income - Larkin's share of Devon's dividends

= $200,000 + ($600,000 x 25%) - ($400,000 x 25%)

= $200,000 + $150,000 - $100,000 = $250,000

6 0
3 years ago
Expanding a brand is a common way for a business to do which of the following?
lana [24]

Answer:

Leverage its brand equity to promote growth is answer.

Explanation:

I hope it's helpful!

3 0
3 years ago
Which financial institution usually offers the higher interest rate on savings accounts?
zaharov [31]
Answer is credit union. in a credit union you are offered higher saving rates and lower loan rates.  <span />
4 0
3 years ago
A property is purchased for $200,000 with an 80 percent LTV. After five years, the owner's equity is $80,000. What would be the
Artyom0805 [142]

Answer:

The approximate annual expected appreciation rate on home equity (annual EAHE) is 14.87%

Explanation:

loan amount = purchase price*LTV

                      = $200,000*0.80

                      = $160,000

for n being the number of years:

annual EAHE = (loan/equity)^1/n

                       = ($160,000/$80,000)^1/5

                       = 14.87%

Therefore, The approximate annual expected appreciation rate on home equity (annual EAHE) is 14.87%

6 0
3 years ago
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