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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.

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The risk-free rate of return is 4 percent and the expected return on the market is 13.5 percent. What is the expected return for
Vilka [71]

Answer:

im sorry

Explanation:

6 0
3 years ago
A manufacturer of printed circuit boards is considering purchasing a new surface mount technology component placement system. Tw
Darina [25.2K]

Answer:

R is a better alternative because it has a higher NPV than Q.

Explanation:

Machines                            Q                                  R

First costs                   $380,000                  $395,000

Net annual revenue $150,000 in year 1,      $152,500

                                  increasing by $500

                                   per year thereafter  

Salvage value               $4,000                             0

Life, years                           8                                 10

MACRS 7 year recovery:

year                    %                         Q                           R

1                      14.29%               54,302                  56,445.50

2                    24.49%               93,062                  96,735.50    

3                     17.49%               66,462                  69,085.50

4                     12.49%               47,462                  49,335.50

5                      8.93%               33,934                   35,273.50

6                      8.92%               33,896                  35,234.00

7                      8.93%               33,934                   35,273.50

8                      4.46%                16,948                    17,617.00

net cash flow

year                                    Q                           R

1                                     116,505.70                   118,880.93

2                                    130,396.70                  132,982.43    

3                                    121,411.70                     123,304.93

4                                    115,086.70                   116,392.43

5                                    110,676.90                    111,470.73

6                                    110,930.10                    111,456.90

7                                    111,326.90                     111,470.73

8                                    108,306.80                 105,290.95

9                                                                            99,125

10                                                                           99,125

Using a financial calculator, I calculated the NPV using a 12% discount rate:

  • Q's NPV = $200,636.15
  • R's NPV = $259,221.01

6 0
3 years ago
rabapples, Inc. purchases and sells boxes of dried fruit. The following information summarizes its operating activities for the​
pantera1 [17]

Answer:

$40.875

Explanation:

Given that,

Selling Expenses = $ 9,600

Merchandise Inventory on December 31 = 33,000

Merchandise Inventory on January 1 = 47,000

Purchases of merchandise = 83,500

Rent for store = 12,100

Sales commissions = 7,300

Sales revenue = 168,500

Cost of goods sold:

= Beginning merchandise inventory + Merchandise purchase - Ending merchandise inventory

= $47,000 + $83,500 + $33,000

= $163,500

If Crabapples sold 4,000 boxes of dry fruit during the​ year, then the cost per box of dry fruits is:

= Cost of goods sold ÷ Number of boxes sold

= $163,500 ÷ 4,000

= $40.875

3 0
3 years ago
Two examples of a management information system
Vlada [557]
E and b not really sure but it’s my best guess
4 0
3 years ago
How are permit departments helpful in conversion investigation efforts?
Lerok [7]

Answer:

Option B is the correct answer.

Explanation:

Business permits regulate the safety, structure, and appearance of the business community. They act as proof that a business follows specific laws and ordinances. Requirements differ by jurisdiction, and failure to comply often results in fines or even having the business shut down. Therefore, most businesses need a general business license to operate in a particular county or city.

Thus, the permit departments are helpful in conversion investigation efforts by identifying the nature and location of businesses, new leases, and recent constructions.

Option B is the correct answer.

3 0
3 years ago
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