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3 years ago

Feldspar Inc. is considering the capital structure for a new division. Management has been given the following cost information:

Business

1 answer:

34kurt3 years ago

8 0

Answer:

Option 4

Explanation:

In this question ,we have to compute the WACC which is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)

For Option 1, it would be

= (0.3 × 10%) × ( 1 - 40%) + (0.7 × 12.5%)

= 1.8% + 8.75%

= 10.55%

For Option 2, it would be

= (0.4 × 10.5%) × ( 1 - 40%) + (0.6 × 13%)

= 2.52% + 7.8%

= 10.32%

For Option 3, it would be

= (0.5 × 11%) × ( 1 - 40%) + (0.5 × 13.5%)

= 3.3% + 6.75%

= 10.05%

For Option 4, it would be

= (0.6 × 11.7%) × ( 1 - 40%) + (0.4 × 14.2%)

= 4.212% + 5.68%

= 9.89%

For Option 5, it would be

= (0.7 × 13%) × ( 1 - 40%) + (0.3 × 15.5%)

= 5.46% + 4.65%

= 10.11%

So based on this, the management should accept option 4 as it derives the best debt asset ratio

The weightage of equity would be come

= 1 - weightage of debt

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In the United States, what is the average age range of CEOs?

Elina [12.6K]

Answer:

Go with either 40s or 50s (mainly 50s)

Explanation:

The more average age of CEOS stood in between 54.1 years, 4.1 years past 50s which is a little past the average range, it also said 40s on that chart too, but that must be for CFOS.

~rere

7 0

2 years ago

A profit-maximizing firm in a competitive market that is producing on a production curve where the marginal product of labor is

wlad13 [49]

Answer: A. a downward-sloping labor demand curve.

Explanation:

If the marginal product of labor is diminishing then that means that for every extra worker hired, less products are made than the last worker. As a result of this, companies will not want to pay high wages to workers because they would be bringing in less revenue when hired.

This will cause a downward-sloping labor demand curve that shows that as more workers are hired, the company would like to pay less wages because each new worker is only producing less than the last worker.

8 0

3 years ago

Your broker suggests that the stock of DUH is a good purchase at $25. You do an analysis of the firm, determining that the recen

jarptica [38.1K]

Answer:

The correct answer is "$28.03".

Explanation:

The given values are:

Good purchase,

= $25

Dividend,

= $1.40

Annually earning,

= 5%

Beta coefficient,

= 1.3

Treasury bills,

= 1.4%

Now,

= $1.4+1.34\times 8-1.4$

= $1.34\times 8$

= $10.244$ (%)

hence,

The fair value will be:

= $1.4\times \frac{1.05}{.10244}-.05$

= $28.03$

Absolutely, the proposal including its brokerage must be adopted because as fair market value was almost $25.

5 0

2 years ago

Crusher Company has provided the following data for maintenance cost:

Firdavs [7]

Answer:

Total Fixed Cost: $13,020

Explanation:

Fixed cost is calculated using high low method.

High low method seeks to find variable cost per hour / unit by dividing the difference of cost (total cost at two levels) with difference of activity level. Than variable cost is reduced from total cost to identify the fixed cost. Below is the calculation:

Current year cost: $ 37,850 Current year machine hours: 19,100

Prior year cost: $ 33,300 Prior year machine hours: 15,600

Variable cost per machine hour = Current year cost - Prior year cost

Current year machine hour - prior year machine hour

Variable cost per machine hour: 37,850 - 33,300 = $1.30 per machine hour

19,100 - 15,600

Variable cost current year: ($1.30 * 19,100) = $24,830

Variable cost prior year: ($1.30 * 15,600) = $20,280

Fixed cost: Total cost - variable cost

Fixed cost current year: 37,850 - 24,830 = $13,020

Fixed cost prior year: 33,300 - 20,280 = $13,020

7 0

3 years ago

Nevada Boot Co. reported net income of $217,400 for its year ended December 31, 2018. Purchases totaled $152,800. Accounts payab

leonid [27]

Answer:

Operating cash flows = $208,000

Explanation:

we know here that

accounts payable balance has decreased from $36,900 and $31,200

inventory balance has increased from $43,300 and $47,000

so to find out the operating cash flow any decrease in current liabilities and any increase in current assets should be subtracted from net income

accounts payable= current liability

and inventory = current asset

and

The operating cash flows to be reported should be computed as

Operating cash flows = Net income - Decrease in accounts payable balances - Increase in inventory balance ....................1

Operating cash flows =

Operating cash flows = $217,400 - ($36,900 - $31,200) - ($47,000 - $43,300)

Operating cash flows = $208,000

7 0

3 years ago