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
A buyer has decided to offer $335,000 for a home that she really likes. The bank will loan her 80% of the purchase price for 30
RUDIKE [14]

Answer:

We have:

Amount of principal = $268,000

Interest payment = $1,522.24

Explanation:

These can be calculated as follows:

Loan principal = Cost of the home * Percentage to borrow = $335,000 * 80% = $268,000

Interest payment = (Loan principal / $1,000) * $5.68 = ($268,000 / $1,000) * $5.68 = 268 * $5.68 = $1,522.24

Therefore, we have:

Amount of principal = $268,000

Interest payment = $1,522.24

5 0
3 years ago
Haystack, Inc. manufactures machinery used in the mining industry. On January 1, 2017 it leased equipment with a cost of $480,00
HACTEHA [7]

Answer:

$175,808

Explanation:

P=R (1-(1+i)^-n)/i

Where P=780,000*90%=$702,000

R=?

i=8%

N=5 years

By putting above values in formula, we get

P=R(1-(1+.08)^-5)/.08

702,000=R*3.993

R=702,000/3.993

R=$175,808

3 0
3 years ago
Firms that are _______ recognize that including a strong social orientation in business is a sound strategy that is in the best
nirvana33 [79]

Answer:

The correct answer is E. socially responsible

Explanation:

A company is socially responsible when it works attached to values and that within its business objectives includes supporting social, economic and environmental needs in order to optimize its competitive situation and its added value.

When a company is socially responsible, it does so by its own decision and not by taxation and its policies, strategies and practices are aimed at favoring its employees, suppliers, family, environment and environment.

The green paper of the European Commission states that "corporate social responsibility is the voluntary integration, by companies, of social and environmental concerns in their business operations and their relationships with all their partners."

7 0
3 years ago
Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent. Which of t
Anna11 [10]

Answer:

The correct answer is Demand is inelastic, but not perfectly.

Explanation:

Inelastic demand is that demand that is not very sensitive to a change in price. In this way, before a variation in the price the quantity demanded reacts in a less than proportional way. For example, if the price increases by 10% and in response the quantity demanded is reduced by less than 10%, then the demand is said to be inelastic.

The elasticity of demand, also known as the elasticity-price of demand, is defined as the percentage change of the quantity demanded before a percentage change in the price.

4 0
3 years ago
Which of the following should which of the following should be of concern when a company considers expanding into a new Internat
vladimir1956 [14]
I think it might be (all of the above)
8 0
3 years ago
Other questions:
  • Select the correct answer. The Patterson family decides to eat out at a new restaurant rather than at their regular diner. What
    13·1 answer
  • Discuss the advantages of understanding accounting as it relates to your current or future position. (consider careers in manage
    6·1 answer
  • How much does it cost to declaw a cat at petsmart?
    10·1 answer
  • An asset has an average return of 11.57 percent and a standard deviation of 24.54 percent. What is the most you should expect to
    5·1 answer
  • On December 31, 2018, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $75,000
    15·1 answer
  • hich of the following statements is correct? Group of answer choices Advertising expense is a product cost Service firms do not
    12·1 answer
  • Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single-member LLC
    6·1 answer
  • Need some help with the 5,6 and 7 please. Thank you for your time :)
    8·1 answer
  • DASHER spent half as much as prancer did on holiday presents this year and cupid spent 3 times more than DASHER . If the total s
    14·1 answer
  • barber charges $20 per haircut. The total cost for running his home-based business is $4,000 per month, which includes his salar
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!