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
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

You might be interested in
Labor unions arose largely in response to the _____. goal of many firms to hire and retain the most highly skilled workers dange
worty [1.4K]

Dangerous working conditions and long hours of factory jobs in the 1800s

4 0
3 years ago
Read 2 more answers
After the stomach food passes through
Angelina_Jolie [31]

Answer:

After food enters your stomach, the stomach muscles mix the food and liquid with digestive juices. The stomach slowly empties its contents, called chyme, into your small intestine. Small intestine.

Explanation:

5 0
2 years ago
Marketing Docs prepares marketing plans for growing businesses. For 2017, budgeted revenues are $1,500,000 based on 500 marketin
pishuonlain [190]

Answer:

Option (a) is correct.

Explanation:

Contribution margin per marketing plan = Sales - Variable cost

                                                                   =  $3,000 - $2,000

                                                                   = $1,000

A.

(1) Break-even\ in\ rooms=\frac{Fixed\ cost}{contribution\ margin\ per\ marketing\ plan}

Break-even\ in\ rooms=\frac{400,000}{1,000}

Break even in marketing plan = 400

(2) Break-even in dollars:

= Break-even in marketing plan × Average rate per plan

= 400 × 3,000

= 1,200,000

(3) Margin of safety = Actual sales - Break-even sales in dollars

                                = 1,500,000 - 1,200,000

                                = 300,000

Margin\ of\ safety\ ratio=\frac{Margin\ of\ safety}{Actual\ sales}

Margin\ of\ safety\ ratio=\frac{300,000}{1,500,000}

                                             = 20%

B.

(1) Contribution margin per marketing plan = Sales - Variable cost

                                                                   =  $4,000 - $2,000

                                                                   = $2,000

Break-even\ in\ rooms=\frac{Fixed\ cost}{contribution\ margin\ per\ marketing\ plan}

Break-even\ in\ rooms=\frac{400,000}{2,000}

Break even in marketing plan = 200

(2) Break-even in dollars:

= Break-even in marketing plan × Average rate per plan

= 200 × 4,000

= 800,000

(3) Margin of safety = Actual sales - Break-even sales in dollars

                                = 1,500,000 - 800,000

                                = 700,000

Margin\ of\ safety\ ratio=\frac{Margin\ of\ safety}{Actual\ sales}

Margin\ of\ safety\ ratio=\frac{700,000}{1,500,000}

                                             = 47%

Therefore, option (a) would achieve the margin of safety ratio more than 45%.

7 0
3 years ago
The next dividend payment by Savitz, Inc., will be $2.04 per share. The dividends are anticipated to maintain a growth rate of 7
Morgarella [4.7K]
I don’t know the answer I just need the points like really badly and I’m really sorry
7 0
3 years ago
The cost object in a job order system is the ______ and the cost object in a process costing system is the ______.
nordsb [41]

Answer:

The correct word for the blank space is: specific job; process.

Explanation:

The cost object represents the cost of an object or department for which that cost is assigned. For instance, the repairs department of a dealership is a cost object of the repairs employees and the repair supplies. Cost objects are usually traceable thus are treated as direct costs for accounting purposes.

Then, <em>the cost object of a job order is the specific job assigned</em>; <em>while the cost object of a process costing system is the process </em>itself.

6 0
3 years ago
Other questions:
  • When the exchange rate between the U.S. dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dolla
    14·1 answer
  • Segments of business's macroenvironment include all of the following except a. the economic environment. b. the social environme
    5·1 answer
  • The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information:
    9·1 answer
  • Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee.To start the fir
    11·1 answer
  • 9. How are industrial goods different from consumer goods? Explain.
    9·1 answer
  • In some areas, entrepreneurs can take advantage of _______ where they can lease low-cost office space and have access to office
    15·2 answers
  • The debit side of an account
    11·1 answer
  • Lee is considering buying one of two newly-issued bonds. Bond A is a twenty-year, 7.5% coupon bond that is non-callable. Bond B
    6·1 answer
  • 6. Say whether the following words are (just) vague, (just) ambiguous, both vague and ambiguous, or neither. Briefly justify you
    7·1 answer
  • ..............................................................................
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!