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Rufina [12.5K]
3 years ago
6

BBQ Corporation has a target capital structure that is 70 percent equity, 30 percent debt. The flotation costs for equity issues

are 15 percent of the amount raised; the flotation costs for debt are 8 percent. If BBQ needs $150 million for a new manufacturing facility, what is the cost when flotation costs are considered
Business
1 answer:
andrey2020 [161]3 years ago
7 0

Answer:

$172,215,844 is the cost when flotation costs are considered

Explanation:

<em>flotation</em>

Weighted average flotation cost = {(Flotation cost debt * Weight debt) + (Flotation cost equity * Weight equity)

= (8% * 0.30) + (15%  * 0.70)

=0.024 + 0.105

= 0.129

= 12.9%

Calculation of the cost of funds

Cost of funds = Amount raised / (1 - Weighted average floatation cost)

= $150,000,000 / (1-0.129)

= $150,000,000 / (0.871)

=$172,215,844

Therefore, the cost of raising fund is $172,215,844

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Evgesh-ka [11]

Answer:

Fee based fund  is the correct answer to the given question

Explanation:

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8 0
3 years ago
Baskets Inc. gathered the following actual results for the current month: Actual amounts: ​ Units produced 6000​ Direct material
ss7ja [257]

Answer:

price variance  $(22,800.00) UNFAVORABLE

Explanation:

(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance

std cost                           $6.00

actual cost                    $9.00

quantity                       7,600

difference                   $(3.00)

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We calculate the actual cost by dividing total cost by the lbs purchased:

68,400/7,600 = 9

Because the diference is negative, the variance is unfavorable.

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8 0
3 years ago
A quality control activity analysis indicated the following four activity costs of an administrative department:
Doss [256]

Answer:

total sales are the internal failure costs is 2%

Explanation:

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form to reduce errors =  $15,000

customer complaints = 75,000

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Correcting errors = 60,000

Total = $180,000

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to find out

total sales are the internal failure costs

solution

we know here that internal failture cost is express as

internal failture cost  = correcting error in form   ...........1

internal failture cost  =  $60000

and

internal failture cost as % of total cost is here as

internal failture cost to sale = \frac{internal\ failture\ cost}{sales}   .......2

internal failture cost to sale = \frac{60000}{3000000}

internal failture cost to sale = 2%

so total sales are the internal failure costs is 2%

3 0
4 years ago
Becca, an office manager for a small construction company, met with representatives from Xerox and Minolta, along with the presi
lilavasa [31]

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6 0
3 years ago
If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is: Multiple Ch
Oliga [24]

Answer:

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Giving the following information:

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6 0
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