Answer:
WACC is 7.24%
After tax cost of debt is 3.95%
Explanation:
WACC=Ke*E/V+Kd*D/V*(1-t)+Kp*P/V
Ke is the cost of equity of 9% or 0.09
Kd is the cost of debt at 5% or 0.05
Kp is the of preferred stock of 4% or 0.04
E is the weight of equity of 65% 0r 0.65
D is the weight of debt of 25% 0.25
K is the weight of preferred stock of 10% or 0.10
t is the tax rate of 21% or 0.21
WACC=(0.09*0.65)+(0.05*0.25*1-0.21)+(0.04*0.10)
WACC=(0.09*0.65)+(0.05*0.25*0.79)+(0.04*0.10)
WACC=7.24%
after tax cost of debt=pretax cost of debt*(1-t)
=0.05*(1-0.21)
=0.0395=3.95%
Answer:
True
Explanation:
A company manager should be able to appraise its operations profit and capital used to generate the profit.
Answer:
1. The demand for lemonade is elastic since, the rise in price of lemonade led to the fall in the quantity demanded of the lemonade.
2. price elasticity of demand is given by = (dQ/dP)*(P/Q)
dQ= change in quantity demanded = Q/2
dP= 1.25-1 = 0.25
putting in the equation for price elasticity,
Price elasticity of demand = [(Q/2)/ 0.25]* [1/Q]
= 1/0.5 = 2
Thus, the price elasticity of demand for lemonade is 2, which is elastic.
3. The increase in price is shown by the movement along the demand curve below:
4. Since the lemons and lemonade are complements, an increase in cost of lemons would increase the cost of lemonade and thus, increasing the price of lemonade and reducing its supply. it would lead to a backward shift in the supply curve of lemonade.
Answer:
The answer is: $47,700
Explanation:
To determine net working capital we use the following formula:
Net working capital = total current assets - total current liabilities
- Current assets: assets that can be converted to cash within a on year period (e.g. cash, account receivables, inventory, etc.)
- Current liabilities: debts that should be paid within a one year period (e.g. accounts payable, wages, taxes, etc.)
Net working capital = $119,800 (current assets = total assets - net fixed assets) - $72,100 (current liabilities)
Net working capital = $47,700