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charle [14.2K]
3 years ago
5

Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued

at $31 per share. The firm also has a bond issue outstanding with a total face value of $280,000 which is currently selling for 82 percent of par. The cost of equity is 14 percent while the after-tax cost of debt is 6.8 percent. The firm has a beta of 1.48 and a tax rate of 30 percent. What is the weighted average cost of capital?
Business
1 answer:
pochemuha3 years ago
3 0

Answer:

the weighted average cost of capital is 11.57 % .

Explanation:

Market Value of Equity = Number of Common Shares Outstanding × Market Price per share

                                      = 30,000 shares × $15

                                      = $450,000

Market Value of Debt = Face Value × 82%

                                    = $280,000 × 82%

                                    = $229,600

WACC = Ke × (E/V) + Kd × (E/V)

           = 14.00 % × ($450,000/ $679,600) + 6.80 %  × ($229,600/ $679,600)

           = 9.27 % + 2.30 %

           = 11.57 %

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postnew [5]

Answer:

The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by:

the high cost of domestic labor.

Explanation:

An entity's ability to be globally competitive in the face of foreign manufacturers with low cost of labor is not helped by the high cost of domestic labor.  The cost of direct labor forms part of the computations for the cost of a product and its pricing.  Cheaper imports are more affordable to consumers than local products, thus causing consumers to prefer imports to domestic products.

4 0
3 years ago
Instruments had retained earnings of $ 390 comma 000 at December​ 31, 2017. Net income for 2018 totaled $ 220 comma 000​, and di
VashaNatasha [74]

Answer:

The retained earnings should Quartz report at December​ 31, 2018 is $570,000

Explanation:

In this question, we apply the retained earnings equation which is shown below:

Ending retained earnings balance = Beginning retained earning balance + net income - dividend paid

= $390,000 + $220,000 - $40,000

= $570,000

The net income should be added while dividend should be deducted for finding out the ending retained earnings balance

3 0
3 years ago
A narrow market focus is to a differentiation-based strategy as a __________________. technological innovation is to a cost-base
olganol [36]

Answer: possible options:

A.growth market is to a differentiation-based strategy

B. broadly-defined target market is to a cost leadership strategy

C. growth market is to a cost-based strategy

D. technological innovation is to cost-based strategy

Answer is B

Explanation:

Companies that use a cost leadership strategy and those that use a differentiation strategy share one important characteristic: both groups try to be attractive to customers in general. These efforts to appeal to a broad range of consumers can be contrasted with strategies that involve targeting a relatively narrow niche of potential customers. These latter strategies are known as focus strategies (Porter, 1980).

Focused cost leadership is the first of two focus strategies. A focused cost leadership strategy requires competing based on price to target a NARROW MARKET. A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Instead, it charges low prices relative to other firms that compete within the target market. For example, you might be able to buy milk cheaper by driving to a big-box grocery store in your local community or town, but the local corner store is the cheapest within walking distance. Redbox, a major DVD rental company, uses vending machines placed outside grocery stores and other retail outlets to rent DVDs of movies for $1. There are ways to view movies even cheaper, such as through the flat-fee streaming video subscriptions offered by Netflix. But among firms that rent actual DVDs, Redbox offers unparalleled levels of low price and high convenience.

8 0
3 years ago
The following budgeted information is provided: Month 1 2 3 Sales in units 15,000 20,000 18,000 Production in units 16,000 22,00
nekit [7.7K]

Answer:

Purchases= 17,200 pounds

Explanation:

Giving the following information:

Production in units:

Month 1= 16,000 units

Month 2= 22,000 units

One pound of materials is required for each finished unit.

The inventory of materials at the end of each month should equal 20% of the following month's production needs.

Beginning inventory= 3,200 lbs.

To calculate the direct material required, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 16,000 + 22,000*0.2 - 3,200

Purchases= 17,200 pounds

8 0
3 years ago
A company began the year with assets of $117,000, liabilities of $28,500, and stockholders' equity of $88,500. During the year a
algol [13]

Answer:

Change in liabilities = $33,300

Explanation

<em>According to the accounting equation, assets is equal to liabilities + equity. And this equation can be re-written as:</em>

Liabilities = assets - equity

Liabilities at the end of the period = assets at the end - equity at the end

Assets at the end= 117,000 + 56,700= 173,700

Equity at the end = 88,500 + 23,400 = 111,900

Liabilities at the end = 173,700 - 111,900=61800

Change in liabilities = Liabilities at the end - Liabilities at the beginning

Change in liabilities = 61,800 - 28,500= $33,300

8 0
3 years ago
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