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Kisachek [45]
2 years ago
10

Central Systems, Inc. desires a weighted average cost of capital of 7 percent. The firm has an after-tax cost of debt of 4 perce

nt and a cost of equity of 10 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
Business
1 answer:
Oksanka [162]2 years ago
8 0

Answer:

1  

Explanation:

Given that,

Weighted average cost of capital = 7%

After-tax cost of debt = 4 percent

Cost of equity = 10 percent

Let the debt of this firm be x, then the equity will be (1 - x),

wacc = (After-tax cost of debt × Debt) + (Cost of equity × Equity)

7% = (4% × x) + [10% × (1 - x)]

0.07 = 0.04x + 0.1 - 0.1x

0.07 = 0.10 - 0.06x

0.06x = 0.10 - 0.07

0.06x = 0.03

x = 0.5

Therefore, if the debt is 0.5 then the equity is 0.5.

Hence, the debt to equity ratio will be:

= 0.5 ÷ 0.5

= 1

The debt-equity ratio is 1 for the firm to achieve its targeted weighted average cost of capital.

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pentagon [3]

Answer:

They are forces of production and social relations of production.

Explanation:

In Marxism and historical materialism the forces of production are a central idea. In the own critique of political economy by Karl Marx and Frederick Engels, it refers to the combination of the means of labor with human labor power.

forces of production is a term used in political economy that refers to the physical means and production techniques to which laborers add value and transform capital into saleable products.

By " relations of production," Marx and Engels meant the total sum of social relationships that people have to enter to survive, produce, and reproduce their means of living...relations can be social ties, economic relationships, or technological relationships.

3 0
3 years ago
A sales manager at Guilden Corporation, a manufacturer of consumer durable goods, instructed his new salesperson, Rita, to sell
Sidana [21]

Answer:

c. quotas

Explanation:

Quotas refer to minimum criteria to be fulfilled to meet the requirement.

Accordingly in the given instance Rita is given certain quotas to fulfill to meet the job. For this she has to sell at least 5 television sets, which shall be flat screen.

Also she must identify at least 10 potential customers who shall buy flat screen sets in near future.

These are basic conditions which are called quotas.

7 0
3 years ago
A company had $7,040,000 in net income for the year. Its net sales were $15,600,000 for the same period. Calculate its profit ma
ivann1987 [24]

The measure of a product, service, or company's profitability is its profit margin. The bigger the percentage representing the profit margin, the more profitable the company is.

Profitability is gauged by profit margin. Finding the profit as a proportion of revenue is used to calculate it.

Profit margin=44.9%

Explanation to the answer:

Profit margin =Net income / sales

                    =7,050,000 / $ 15,700,000

                    =0.44904

                    =44.9%

Profit margin =44.9%

Learn more about profit margin here brainly.com/question/24161087

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5 0
2 years ago
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an ann
VashaNatasha [74]

Answer:

So, accounting rate of return = 33 %

Explanation:

given data

net income after tax = $179,850

initial cost = $545,000

time = 7 year

salvage value = $34,000

we will get here  the accounting rate of return

solution

as we know that accounting rate of return is express as

accounting rate of return = Net income ÷ initial investment    .................1

put here value and we get

accounting rate of return = \frac{179850}{545000}  

So, accounting rate of return = 33 %

7 0
2 years ago
Mega-Big Corp. has a small strategic business unit (SBU) that produces a component vital to the manufacturers of automobiles and
galina1969 [7]

Answer:

Cash cow

Explanation:

Boston consulting group (BCG) Matrix: It is a framework created for the strategic position of the business and its potential. It classifies business units into four categories of a cash cow, Stars, question mark and Dogs on the matrix of the growth rate of industry and relative market share. This matrix is also known as the growth-share matrix.  

In the BCG matrix, If business unit lies in the category of a Cash cow, then it is considered as market leader as it generates more income and company are able to get a good return out of investment in this business unit. In the matrix, the Business unit have high market share, however, it has less growth prospect.  

In the given case, Mega-Big Corp has been manufacturing components of automobiles and has been extremely profitable for 18 years, therefore, Mega-Big Corp. is most likely considered a cash cow.

6 0
3 years ago
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