Inflation reducing the value of investors' financial assets I think its that i'm not sure
Answer:
Option (B) 10.87%
Explanation:
Data provided in the question:
common stock outstanding = 30,000
Market price = $15.00
Issuing price of share = $31 per share
Total face value = $280,000
Selling price = 86% of par
Cost of equity, ke = 13%
After-tax cost of debt, kd = 6.9%
Beta = 1.48
Tax rate = 30%
Now,
Market value of debt, Md = Total face value × Selling price
= $280,000 × 86%
= $240,800
Market value of equity, Me = Stocks outstanding × Market price
= 30,000 × $15
= 450,000
Thus,
WACC = [ Kd × Md + Ke × Me ] ÷ ( Md + Me )
= [ 0.069 × $240,800 + 0.13 × $450,000 ] ÷ ( $240,800 + $450,000 )
= $75,115.20 ÷ $690,800
= 0.1087
or
= 0.1087 × 100%
= 10.87%
Option (B) 10.87%
Answer:
The correct answer are B and D
Explanation:
CVP stands for the Cost Volume Profit analysis, which is defined as the situation where the companies evaluate or determine what will happen financially when the selling price varies or change, the costs change or the production volume changes.
The assumptions of the CVP are:
1. Costs are linear and are designated either variable or fixed.
2. The selling price per unit will be constant and will not decrease/ increase grounded on volume.
3. In the case of the firm or business which sells the multiple products, the sales mix will be constant.
Answer:
(a) $880.23 and (b) $1526.84
Explanation:
Please see attachment .
