A company finds that there is a linear relationship between the amount of money that it spends on advertising and the number of
1 answer:
You might be interested in
Answer:
raw material inventory turnover = 4.42
number of days sale in raw materials inventory = 21.97
Explanation:
given data
beginning inventory = $930 million
ending inventory = $880 million
purchased raw materials = $3,956 million
used raw materials = $4,006 million
solution
we get here first raw material inventory for turnover that is
raw material inventory turnover = ..............1
here average raw material inventory =
average raw material inventory = $905 million
so from equation 1
raw material inventory turnover =
raw material inventory turnover = 4.42
and
now number of days' sales in raw materials inventory will be as
number of days sale in raw materials inventory = × 365 .............2
put here value
number of days sale in raw materials inventory = × 365
number of days sale in raw materials inventory = 21.97
Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%