Answer:
d. It will estimate higher residual values for its assets.
Explanation:
The depreciation is calculated on the value of the asset to be depreciated in the life of the asset that is cost - Salvage or residual value.
Thus, when the residual value is high then the amount to be depreciated will be low.
Then no matter whatever the method of depreciation be: the value of depreciation expense in dollars will be ultimately.
This will help in showing the highest earnings whatever the circumstance be.
Thus correct option is D.
Answer:
a. Compute the after tax cost of debt.
after tax cost of debt = 11% x (1 - tax rate) = 11% x 0.8 = 8.8%
b. Compute the after tax cost of preferred stock.
after tax cost of preferred stock = cost of preferred stock (no taxes are deducted for paying preferred dividends since they are paid in capital)
cost of preferred stocks = $6.40 / ($60 - $6) = $6.40 / $54 = 11.85%
c. Based on the facts given above, is the treasurer correct?
the difference = 11.85% - 8.8% = 3.05%, so the treasurer was right
Answer:
c. 120
Explanation:
The economic order quantity is the minimum amount of inventory that a seller must keep to demand and lower the holding cost. The formula for Economic order quantity is represented by the formula:
EOQ =
EOQ =
EOQ = 120
Answer:
are achieved when a firm reduces its average cost of production as it produces more.
Explanation:
Economies of scale is reduction in the average cost as production increases due to the large size of the firm which makes it more efficient.
It is large firms that enjoy economies of scale.
Economies of scale can be achieved by buying supplies in large quantities. When firms buy in large quantities, they enjoy discounts which reduces their average cost. This is a form of internal economies of scale.
I hope my answer helps you.
Answer: 9.32%
Explanation:
The cost of levered capital is needed to calculate WACC.
Cost of levered capital = Cost of unlevered capital + (Cost of unlevered capital - cost of debt)(1 - tax) * Debt to equity ratio
Debt-equity ratio
= 22% / (100% - 22%)
= 28.205%
Cost of levered capital = 10% + (10% - 6%) * (1 - 31%) * 28.205%
= 10.78%
WACC = (Weight of debt * after tax cost of debt) + (Weight of capital * cost of capital)
= (22% * 6% *(1 - 31%)) + (78% * 10.78%)
= 9.32%