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liberstina [14]
3 years ago
13

Caddie Manufacturing has a target debt-equity ratio of .35. Its cost of equity is 12 percent, and its pretax cost of debt is 6 p

ercent. If the tax rate is 21 percent, what is the company’s WACC?
Business
1 answer:
frutty [35]3 years ago
7 0

Answer:

10.12%

Explanation:

The computation of the WACC is shown below:

= Cost of debt × (1 - tax rate) × weight of debt + cost of equity × weight of equity

= 6% × (1 - 0.21) × 0.35 ÷ 1.35 + 12% × 1 ÷ 1.35

= 1.23% + 8.89%

= 10.12%

We simply multiplied the capital structure with each of its weight so that the WACC could come and the same is to be considered

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Pratt Company has old inventory on hand that cost $15,000. Its scrap value is $20,000. The inventory could be sold for $50,000 i
Yuri [45]

<u>Answer:</u>

<u>Pratt Company should incur additional manufacturing cost of $15,000, since they stands to gain more.</u>

<u>Explanation:</u>

Note that every company usually place more importance to profit first, and tries to reduce losses. if Pratt Company goes with the option of selling for the scrap value, it's profit amounts to only $5,000 ($20,000-$15,000). However, <em>manufacturing further despite the additional cost gives Pratt Company a profit from the transaction of $35,000 ($50,000-$15,000).</em>

So, profit wise, Pratt should incur additional manufacturing cost of $15,000, since they stands to gain more.

5 0
3 years ago
Pure competition is important to economists because it is __________________ . Pure competition is important to economists becau
Ksju [112]

Answer:

a and b

Explanation:

A perfect or pure competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

Due to maximum competition in a pure competition, it is the lowest cost to the buyer.

Pure competition is efficient because, goods are priced at equilibrum

6 0
2 years ago
Leslie in as administrative manager with a number of exciting new ideas about how to change organizational procedures and run th
Viefleur [7K]

Answer:

discretion.

Explanation:

A manager can be defined as an individual who is saddled with the responsibility of providing guidance, support, supervision, administrative control, as well as acting as a role model or example to the employees working in an organization by being morally upright.

Generally, managers are typically involved in taking up leadership roles and as such are expected to be build a strong relationship between their employees or subordinates by creating a fair ground for effective communication and sharing of resources and information. Also, managers are required to engage their staff members (entire workforce) in the most efficient and effective manner.

In this scenario, the leadership of the company exhibited a low degree of discretion, which would consequently limit Leslie's ability to influence the other staffs (employees) working in the company while trying to achieve his goal.

6 0
2 years ago
Read 2 more answers
Goshen Company's contribution format income statement for the most recent month is given below: Sales (42,000 units) $ 1,218,000
scoundrel [369]

Answer:

Sales Revenue        1,218,000 1,218,000

Variable Cost                  852,600 487,200

Contribution margin   365,400 730,800

Fixed Cost                  292,320 657,720

Operating Income            73,080 73,080

Explanation:

Variable cost 852,600 / 42,000 units = 20.3 then - 8.7 for the decrease due to nex equipment = 11.6  Then 11.6 x 42,000 = 487,200

8 0
3 years ago
The Nansen Company uses the perpetual inventory system and the moving - average method to value inventories. In August, there we
lidiya [134]

Answer:

COGS = $120,000

Explanation:

We have to determine the average cost per unit:

  • 10,000 units at $3 per unit, total cost $30,000
  • 20,000 units at $6 per unit, total cost $120,000

There are 30,000 units with a total cost of $150,000. The average cost per unit = $150,000 / 30,000 units = $5 per unit

On August 15, 24,000 units were sold and the COGS was $120,000 (= 24,000 units x $5 per unit)

5 0
3 years ago
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