The correct answer is <span>Certificate of Deposit
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The weighted average cost of capital (WACC) for ABC Limited is 12.63%
The weighted average cost of capital(WACC) of a firm is the average cost of finance incurred by the firm on all its sources of finance.
It is determined as the sum of the cost of each source of finance multiplied by their respective weights in the firm's capital structure.
By weights, I mean the percentage of funding each source contributes to the total finance available at the firm's disposal.
WACC=(weight of equity*cost of equity)+(weight of mezzanine finance*cost of mezzanine finance)+(weight of debt*cost of debt)
weight of equity=equity finance/total finance
cost of equity=15%
weight of mezzanine finance=mezzanine finance/total finance
cost of mezzanine finance=9.5%
weight of debt of finance=debt finance/total finance
total finance=$5m+$2m+$1m
total finance=$8m
WACC=($5/$8*15%)+($2/$8*9.5%)+($1/$8*7%)
WACC=12.63%
Find further guidance on weighted average cost of capital's computation in the link below:
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Answer:
c. reserves increase by $100 million and the money supply increases by more than $100 million
Explanation:
Based on the information given in a situation where a FRACTIONAL-RESERVE BANKING SYSTEM has no availability of EXCESS RESERVES and no CURRENCY HOLDINGS, which means that if the central bank buys BONDS that worth $100 million, the RESERVES will tend to INCREASE by the amount of $100 million while the MONEY SUPPLY on the other hand will INCREASES by more than $100 million.
