Answer:
Option (D) is correct.
Explanation:
We have to use MM proposition that cost of equity will change itself in such a manner so that it can take care of its debt.
Cost of equity:
= WACC of all equity firm + (WACC of all equity - Cost of debt ) × (Debt -to-equity ratio)
At the beginning, when there was no debt,
WACC = cost of equity = 10%
Levered cost of equity:
= 10% + ( 10% - 6%) × 0.2
= 10.8%
Therefore, Taggart's levered cost of equity would be closest to 11%.
Answer:
d) The value of equity is $0
Explanation:
Bank loans are classified as performing and nonperforming loans. Nonperforming loans that stay for over a long period (usually 12 months) are considered to be a loss.
When a bank makes a loss on loans (loan goes bad due to nonrepayment) they make provisions and debit the business equity for the loss.
The given loan amount is $800 and the bank had to provision 5% of that amount.
Loss from loan= 800* 0.05= $40
This is deducted from equity= 40- 40= $0
Answer:
I prepared an amortization schedule using an excel spreadsheet. The original monthly payment was $836.44. After the 120th payment, the remaining principal balance was $68,940.64. Since she didn't pay anything for 1 year, the new principal balance will be $68,940.64 x (1 + 8%) = $74,455.89
I prepared another amortization schedule for the remaining 9 years, and the monthly payment is $969.32. She will pay off the loan in 108 months.
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<span>Process costs are costs that limit the occurrence of defects and imperfections. Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process. ... It is a method of assigning costs to units of production in companies producing large quantities of homogeneous products.</span>
Answer:
20%
Explanation:
if the advertising elasticity = 0.25 and you want to increase the quantity demanded by 5%, you will need to increase advertisement by = 5 / 0.25 = 20%
The advertising elasticity measures how much does a change in advertising changes the quantity demanded of a product or service.
