The answer is option D. B<span>usiness financial management]
The job of Business Financial managers cut across many sectors; their job is to see to </span><span>the </span>financial<span> health of an organization, by produce </span>financial<span> reports, directing investment activities, and developing strategies and plans for the long-term </span>financial<span> goals of their organization. As such, they are employed not only in private companies and non-profits, but also in such places as </span><span>hospitals, department stores, and car manufacturring firms.</span>
Answer:
a. 4.94%
b. 11.48%
Explanation:
Here in this question, we are interested in calculating the pretax cost of debt and cost of equity.
We proceed as follows;
a. From the question;
The debt equity ratio = 1.15
since Equity = 1 ; Then
Total debt + Total equity = 1 + 1.15 = 2.15
Mathematically ;
WACC = Cost of equity x Weight of equity + Pretax Cost of debt x Weight of debt x (1-Tax rate)
Where WACC = 8.6%
Cost of equity = 14%
Weight of equity = 1/(total debt + total equity) = 1/(1+1.15) = 1/2.15
Pretax cost of debt = ?
Weight of debt = debt equity ratio/total cost of debt = 1.15/2.15
Tax rate = 21% = 0.21
Substituting these values, we have;
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
Pretax cost debt = (8.6%-6.511628%)/(1.15/2.15 x (1-21%))
Pretax cost of debt = 4.94%
b. WACC = Cost of equity x Weight of equity + After tax Cost of debt x Weight of debt
8.6% = Cost of equity x 1/2.15 + 6.1% x 1.15/2.15
Cost of equity = (8.6%-3.26279%)/(1/2.15)
Cost of equity = 11.48%
Answer:
-0.4242
Explanation:
Ra = 0.21 or 21%
Rf = 0.045 or 4.5%
Rp = 0.28 or 28%
Expected return on a portfolio is weighted average return of its assets
:
Rp = Rf*(1-w) + Ra*w
28 = 4.5*(1-w) + 21*w
28 = 4.5 - 4.5w + 21w
28 - 4.5 = 21w - 4.5w
21w - 4.5w = 28 - 4.5
16.5w = 23.5
w = 23.5/16.5
w = 1.4242
Hence, weight of risky asset = 1.4242
So, Weight of risk free asset = 1 - 1.4242
Weight of risk free asset = -0.4242
Answer:
Price floor binding
b. price ceiling binding
price floor and binding
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.
The minimum price of milk is above equilibrium price. So, it is a binding price floor
The maximum price of milk is below equilibrium price. It is binding price ceiling
If teenagers can't find jobs due to minimum wages law. It means that the minimum wage must be above equilibrium price. This is because it is when price is above equilibrium price that supply of labour outstrips demand. So, it is a binding price floor
Answer:
different time horizon
Explanation:
The time horizon is a certain time when a planned event/process expected to be finished. A different department can have different considerations/priorities when making the ideal time horizon. In this case, the marketing team wants the product released faster(in the first quarter) to capture market share as the main consideration. But the production team who responsible for the product quality wants more time to develop the product.
