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sladkih [1.3K]
3 years ago
13

The Color Box uses a combination of common stock, preferred stock, and debt financing. The company wants preferred stock to repr

esent 7 percent of the total financing. It also wants to structure the firm in a manner that will produce a weighted average cost of capital of 9.5 percent. The aftertax cost of debt is 4.8 percent, the cost of preferred is 8.9 percent, and the cost of common stock is 14.7 percent. What percentage of the firm's capital funding should be debt financing?a. 44.78 percentb. 54.15 percentc. 52.03 percentd. 48.42 percente. 39.21 percent
Business
1 answer:
ANEK [815]3 years ago
6 0

Answer:

Weight of debt, Wd = 0.4842 or 48.42%

Explanation:

WACC = Wd×Rd×(1-t)+We×Ke+Wp×Kp

W is weights of respective portfolios

R is return on respective portfolios

Wd+We+Wp = 1

9.50% = Wd×4.80%+(0.93-Wd)×14.70%+0.07×8.90%

9.5% = Wd×4.80%+13.671%-14.70%×Wd+0.623%

9.90%×Wd = 4.794%

Weight of debt, Wd = 0.4842 or 48.42%

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Explanation:

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Gundy Company expects to produce 1,304,400 units of Product XX in 2020. Monthly production is expected to range from 87,000 to 1
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Answer:

                             Gundy Company

             Manufacturing Flexible Budget Report

             For the Month Ended March 31, 2020

                                   Budget                Actual

Units produced         107,000               107,000  

Variable Costs:

Direct Materials        $428,000            $455,000      $27,000 U

                                 ($4 * 107,000)

Direct labor               $749,000             $746,000      $3,000 F

                                  ($7 * 107,000)

Overhead                   $963,000            $971,000      $8,000 U

                                  ($9 ×* 107,000)

Total variable costs  $2,140,000          $2,172,000  $32,000 U

Fixed Costs:

Depreciation                $434,800           $434,800     $0

Supervision                  $108,700            $108,700      $0

Total fixed costs          $543,500          $543,500     $0

Total costs                   $2,683,500         $2,715,500    $32,000 U

Workings:

Depreciation = (1,304,400 * $4) / 12 = $5,217,600 / 12 = $434,800

Supervision = (1,304,400 * $1) / 12 = $1,304,400 / 12  = $108,700

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Wilturner Company incurs $76,000 of labor related directly to the product in the Assembly Department, $25,000 of labor not direc
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Answer:

correct option is b) $76,000 and $37,000

Explanation:

given data

Labor related directly to the product = $76,000

labor not directly related to the product = $25,000

labor for services = $12,000

solution

As here Direct Labor is express as

Direct Labor  = Labor related directly to the product   ...............1

so

Direct Labor = $76,000

and

Factory Overhead will be as

Factory Overhead = Labor not directly related to the product + labor for services  ,................................2

put here value and we get

Factory Overhead  $25000 + $12000

Factory Overhead = $37,000

so here correct option is b) $76,000 and $37,000

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