1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Komok [63]
3 years ago
10

For purposes of computing the WACC, if the book value of equity exceeds the market value of equity, then: the market value of eq

uity should be used. the book value of equity should be used. the market value of equity less retained earnings should be used. the book value of equity less retained earnings should be used.
Business
2 answers:
vagabundo [1.1K]3 years ago
5 0

Answer:

The market value of equity should be used.

Explanation:

Their are only two methods which are book value method or market value method. The market value method is preferred because the reason is that the market value gives the more accurate numerical value that the securities of the company will give which is the required rate of return to its investors. However historic cost data is not useful because the value of stock and bonds keeps changing every second in the stock exchange and their is the risk that the WACC calculated is inaccurate which implies that the project appraised is also incorrect.

So the best way to calculate the weighted cost of capital is that we should use the fair value of the securities.

poizon [28]3 years ago
3 0

Answer:

For purposes of computing the WACC, if the book value of equity exceeds the market value of equity, then the book value of equity less retained earnings should be used.

Explanation:

Weighted Average Cost of Capital (WACC) is the average rate a company expects to pay to finance its assets.

It is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted

WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight, and then adding the products together to determine the value.

You might be interested in
2. Marginal analysis is sometimes called "thinking on the
antiseptic1488 [7]

Answer:

fly.

Explanation:

Thinking on the fly is the act of analyzing something quickly and sometimes without all the facts.

6 0
2 years ago
A company sold equipment for $100,000; the equipment had cost $300,000 and had accumulated depreciation of $180,000. The company
antiseptic1488 [7]

Answer:

Debit to loss on sale of equipment of $20,000

Explanation:

Data provided in the question:

Selling cost of the equipment = $100,000

Cost of the equipment = $300,000

Accumulated depreciation of the equipment = $180,000

Now,

The book value of the equipment

= Cost of the equipment - Accumulated depreciation

= $300,000 - $180,000

= $120,000

Therefore,

Proceeds for selling

= Selling cost of the equipment - Book value of the equipment

= $100,000 - $120,000

= - $20,000

Here, the negative sign depicts a loss

Hence,

The company’s journal entry to record the sale of the equipment would include a Debit to loss on sale of equipment of $20,000

7 0
3 years ago
The average GDP per capita for the world is about _________ and approximately ______ of the world population lives below that nu
WITCHER [35]

Answer:

I'll go with option C

According world bank data the GDP per capita for the World as at 2018 is 17,912.368 ( current international $)

5 0
3 years ago
What is the LEAST LIKELY way a firm can finance operations?
drek231 [11]

Answer:

D

Explanation:

6 0
3 years ago
Professionalism is a skill necessary for......
kykrilka [37]

Professional skills are career competencies that often are not taught (or acquired) as part of the coursework required to earn your masters or PhD.

4 0
3 years ago
Read 2 more answers
Other questions:
  • Stoneheart Group is expected to pay a dividend of $3.05 next year. The company's dividend growth rate is expected to be 4.5 perc
    13·1 answer
  • Simone started the meeting at BCD Co. by focusing the attendees on the company's current status. "We have a good product mix," s
    11·1 answer
  • Multiple Choice Question
    8·1 answer
  • The management software for your sound card has just downloaded and installed the latest driver for your sound card. After a reb
    5·1 answer
  • If the government of a small, open economy wishes to reduce a trade deficit, which policy action will be successful in achieving
    13·1 answer
  • The journal entry to record the receipt of a payment within the discount period on a sale of $900 with terms of 2/10, n/30 will
    12·1 answer
  • To satisfy MSRB disclosure requirements for new municipal issues, a customer would be provided with a copy of the: A legal opini
    15·1 answer
  • Mandy Feng employs Jay Johnson at a salary of $35,000 a year. Feng is subject to employer Social Security taxes at a rate of 6.2
    10·1 answer
  • Simplify (7^5)^3 <br><br>A)(1/7)^15<br>B)35^3<br>C)7^15<br>D)7^8
    15·2 answers
  • Crawl Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock out
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!