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adelina 88 [10]
4 years ago
13

The required return on equity for an all-equity firm is 10.0 percent. They are considering a change in capital structure to a de

bt-to-equity ratio of 1/2, the tax rate is 40 percent, the pre-tax cost of debt is 8 percent. Find the new cost of capital if this firm changes capital structure.
Business
1 answer:
Sladkaya [172]4 years ago
5 0

Answer:

The new cost of capital if this firm changes capital structure is 1.3

Explanation:

From the provided information:

All equity beta = 1

New D/E ratio = 0.5

Then, the new capital structure with levered beta is given by:

new capital structure  = All equity beta *(1 + D/E*(1 - tax rate))

                                     = 1*(1 + 0.5*(1 - 40%))

                                     = 1.3

Therefore, The new cost of capital if this firm changes capital structure is 1.3

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At​ UPS, business was strong but profits were​ down, leading managers to look for ways to increase profits from existing operati
Marat540 [252]

Answer:

At this point, the managers of UPS are at the First step in the decision-making process, which is Identifying the problem.

Explanation:

The decision-making process consists of evaluating a particular situation, gathering information, developing plans and taking the necessary steps to make good quality decisions and obtain satisfactory results. This process has seven steps:

  1. Identifying the problem
  2. Collecting information
  3. Identifying the alternatives
  4. Weighing the evidence
  5. Choosing from alternatives
  6. Implementing actions
  7. Evaluating the results

For this particular case, the UPS managers are in the first step of the process. They have <u>identified an issue</u> with their profits <u>and defined a clear path for problem-solving</u>, which is increasing the profit via their existing operating income.

6 0
3 years ago
A partial listing of costs incurred at archut corporation during september appears below: direct materials $ 113,000 utilities,
Murrr4er [49]

Calculation of Total Manufacturing Overhead Costs:


Manufacturing overhead costs are indirect costs incurred in relation to the production.

From the given information manufacturing overhead costs shall include factory Utilities $5,000, Indirect labor $ 25,000, depreciation of production equipment $ 20,000


Hence the Total Manufacturing Overhead Costs shall be (5000+25000+20000)=<u>$50,000</u>




5 0
4 years ago
Len Corp. reported net sales of $300 million last year and generated a net income of $66 million. Last year’s accounts receivabl
Anna71 [15]

Answer:

$37,000,000

Explanation:

When you are preparing a statement of cash flows, you start with net income and then make all necessary adjustments that include any changes in accounts receivables.

Cash flow from operating activities:

Net income                                                $66,000,000

Adjustments to net income:

Increase in accounts receivable             <u>($29,000,000)</u>

Net cash flows from operating activities $37,000,000

5 0
3 years ago
Match the terms in Column I with the definitions in Column II.
Aleksandr-060686 [28]

Answer: 1) Drawer = B. Writer of the check. A drawer is who signs the check.

2) Drawee = F. payee. The check is in favor of this person.

3) Endorsement =  D. transfer the check.

4) Post-dated check =  E. future date. It is a check that can be cashed from a future date.

5) Prove cash = C. reconcile the bank statement.

7) Imaged check = A. substitute check.

7 0
3 years ago
The future value and present value equations also help in finding the interest rate and the number of years that correspond to p
vichka [17]

Answer:

i=4%

Explanation:

this problem is possible to solve applying the principle of future value, keep in mind the next formula:

FV=PV*(1+i)^{n}

where FV is future value, PV is the present value, i is the periodic interest rate and n is the number of periods. So applying to this particular problem we have:

16,843.93=12,800*(1+i)^{7}

the difference here is that we must solve n so we can do:

(\frac{16,843.93}{12,800})^{1/7}-1=i

so i=4%

4 0
3 years ago
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