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hichkok12 [17]
3 years ago
13

Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent

and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
Business
1 answer:
Anon25 [30]3 years ago
7 0

Answer:

Debt-equity ratio = 0.34 or 34%

Explanation:

Weighted average cost of capital (WACC) = 12.7%

Cost of debt = 4.8%

Cost of equity = 15.4%

Let 'We' and 'Wd' be the fraction of capital corresponding to equities and costs, respectively, and that We + Wd =1.

The weighted average cost of capital is given by

WAAC = 0.154*W_e +0.048W_d\\0.127 = 0.154*W_e +0.048*(1-W_e)\\0.079 = 0.106W_e\\W_e=0.745\\W_d = 1-0.745=0.255

The debt-equity ratio is:

DER = \frac{W_d}{W_e}=\frac{0.255}{0.745}\\DER =0.34

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4 0
1 year ago
U-1 is a more____
Lady bird [3.3K]

Answer:

B. narrow, have been unemployed for 15 weeks or more weeks.

Explanation:

Unemployment rate refers to the percentage of the total labor force in an economy, who are unemployed but seeking to be gainfully employed. The unemployment rate is divided into various types, these include;

I. Natural Rate of Unemployment (NU).

II. Frictional unemployment rate (FU).

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IV. Actual unemployment rate (AU).

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5 0
2 years ago
1 If Peter temporarily takes over Thomas's job in his absence, what does this move represent? Briefly explain what this entails.
Ludmilka [50]

Answer:

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3 years ago
Suppose that a stock gave a realized return of 20% over a two-year time period and a 10%
KengaRu [80]

Answer:

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Explanation:

Data provided in the question:

Realized gain

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here,

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or

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Geometric average = 0.1657

= 0.1657 × 100%

= 16.57%

7 0
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