Answer:
if the flotation costs were 2%, the after-tax cost of debt is 5.10%
if the flotation costs were 11%, the after-tax cost of debt is 4.63 %
Explanation:
<em>After-tax cost of debt = Market Interest × ( 1 - tax rate)</em>
<u>Calculation of the Market Interest </u>
Hint : Use the time value of money principles
Pv = -$1,000
Pmt = $1,000 × 8 % = $80
P/yr = 1
N = 20
Fv = $1,000
YTM = ?
Using a financial calculator, the market interest is 8%
After-tax cost of debt = Market Interest × ( 1 - tax rate)
= 0.08 × (1- 0.35)
= 0.052 or 5.20 %
<u>If Flotation cost is 2%</u>
Net Receipts after flotation cost = Cost × ( 1 - flotation rate)
= 5.20 % × (1-0.02)
= 5.096 % or 5.10% (two decimal places)
<u>If Flotation cost is 11%</u>
Net Receipts after flotation cost = Cost × ( 1 - flotation rate)
= 5.20 % × (1-0.11)
= 4.628 % or 4.63 % (two decimal places)
Answer:
0.5202
Explanation:
Calculation to determine what weight should it use for debt when calculating the cost of capital
First step is to compute the Present value (PV) using financial calcualtor -
Put in calculator-
FV 2000
PMT 0
I 5.50%
N 24( 30 years- 6 years)
Compute PV ($553.31)
Second step is to calculate the Total value of debt
Price of bond = $553.31
*Number of bond = $165,000
=Total value of debt $91,296,150
($553.31*165,000)
Now let calculate the Weight of debt
Weight of debt =$91,296,150/($91,296,150+$84,200,000)
Weight of debt=$91,296,150/175,496,150
Weight of debt=0.5202
Therefore weight should it use for debt when calculating the cost of capital is 0.5202
Answer: Option B
Explanation: Marketing plan refers to the plan made by the senior managers of an organisation that depicts the marketing strategy to be used by the company in the coming period. This is a flexible plan and is made for generally a period of 12 months.
This, plan consist of of all the factors that are essential for positive marketing. It outlines the execution procedure and the various analysis required. It also includes the financial and controlling procedures to be used.
Hence, we can conclude that the right answer is option B.
Answer:
$768
Explanation:
The computation of the ending inventory using weighted average cost is shown below:
But before that average cost per unit is
= (510 × $2.44 + 380 × $2.72) ÷ ($510 + $380)
= ($1,244.40 + $1,033.60) ÷ (890)
= $2.56
Now the ending inventory is
= (890 - 590) × $2.56
= $768