1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kipiarov [429]
3 years ago
7

An all-equity firm has a return on assets of 15.3 percent. The firm is considering converting to a debt-equity ratio of 0.30. Th

e pre-tax cost of debt is 8.1 percent. Ignoring taxes, what will the cost of equity be if the firm switches to the leveraged capital structure
Business
1 answer:
Elina [12.6K]3 years ago
8 0

Answer:

re 17.4600%

Explanation:

We will calculate using the Modigliani Miller proposition with no taxes to solve for the cost of equity of a levered firm

r_e = r_u + (r_r - r_b) \frac{B}{S}\\where:\\r_e= $cost of equity\\r_b= $cost of debt\\r_u= $return on assets\\B/S = Debt to Equity

We plus our values into the formula and solve

r_e = 0.153+ (0.153 - 0.081)0.3

re 17.4600%

You might be interested in
Describe China’s strategy in Africa.
Lemur [1.5K]

Answer:

The strategy for China seems to be to use the resources that Africa has in its hands from the small groups that control parts of the continent in order to fund themselves as well as help increase revenue for the countries that allow them to do so.

Explanation:

8 0
3 years ago
1. In what way do organization charts create a picture of an<br> organization?
Allushta [10]

Answer:

In a structural way

Explanation:

the chart is the diagram that shows how the power flows through the company as it indicates the levels of hierarchy within.

5 0
3 years ago
Producer surplus is:
Elena L [17]

Answer: Option (d) is correct.

Explanation:

Producer surplus is associated with the producer of a good. Graphically, producer surplus is the area between the upper portion of supply curve and equilibrium price level. Producer surplus is also defined as the difference between the price at which sellers are willing supply and the actual price they received.

Producers surplus = Price paid by buyers - Cost of production

4 0
3 years ago
At year end, CurlZ, Inc.'s inventory consists of 370 bottles of CleanZ at $3 per bottle and 270 boxes of DyeZ at $10 per box. Ma
sasho [114]

Answer:

$3,270

Explanation:

Inventory should be value at lower of cost and market value.

Bottles of CleanZ:

Cost of inventory = Bottles of CleanZ × Price per bottle

                             = 370 × $3

                             = $1,110

Market value of inventory:

= Bottles of CleanZ × Market value per bottle

= 370 × $3.20 per bottle

= $1,184

Lowest of cost and market value of inventory is $1,110.

Boxes of DyeZ:

Cost of inventory = Boxes of DyeZ × Price per box

                             = 270 × $10

                             = $2,700

Market value of inventory:

= Boxes of DyeZ × Market value per box

= 270 × $8 per box

= $2,160

Lowest of cost and market value of inventory is $2,160.

Therefore, the DyeZ. CurlZ should report its inventory at:

= Lowest of cost and market value of inventor for (CleanZ + DyeZ)

= $1,110 + $2,160

= $3,270

3 0
3 years ago
An office management firm has developed a system for efficiently organizing small medical and dental practices both through prop
Olegator [25]

Answer:

The answer is option C.  achieve economies of scope.

Explanation:

An Economies of scope is a  proportionate saving gained by producing two or more distinct goods, when the cost of doing so is less than that of producing each separately.  

Based on the scenario portrayed in the question, the office management firm is hoping to achieve economies of scope.

6 0
3 years ago
Read 2 more answers
Other questions:
  • The stock market is experiencing a bear market. Trading volume has been high for weeks. Even the most stable stocks are feeling
    7·1 answer
  • The management of Elamin Corporation is considering the purchase of a machine that would cost $365,695 and would have a useful l
    9·1 answer
  • A​ person's ________​ is/are the unique combination of​ emotional, thought, and behavioral patterns that affect how he or she re
    7·1 answer
  • In some markets, the government regulates the price of utilities so that they are
    14·1 answer
  • A nonprofit entity conducts a special fundraising campaign at the end of fiscal year 2018, and specifies that it will use the mo
    8·1 answer
  • Mrs. Arnold is spending all her money income by buying bottles ofsoda and bags of pretzels in such amounts that the marginal uti
    10·1 answer
  • Solutions Group managers suggest that clients consider doing a resonance test when designing advertising, because this will help
    12·1 answer
  • Product prices are set on the marketing budget detail spreadsheet
    14·1 answer
  • Question 3
    10·1 answer
  • If the banking system has demand deposits of $100,000, total reserves equal to $15,000, and a required reserve ratio of 10 perce
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!