Answer:
After-tax cost of deb = 6%
Explanation:
<em>The cost of debt is the required rate of return payable to investors in the debt instruments of a company. These investors include providers of long term debt finance to the company.</em>
<em>The cost of debt finance can determined by working out the yield to maturity on debt with adjustment for tax. </em>
<em>It is noteworthy that debt finance affords the company a tax savings advantage because interest expense incurred on the use of debt of are tax deductible expense.</em>
After-tax cost of debt = (1- Tax rate) × before-tax cost of debt
Before tax cost of debt = 10%
Tax rate = 40%
After-tax cost of debt = (1-0.4) × 10% = 6%
After-tax cost of deb = 6%
Answer:
Total cash collection= $20,375
Explanation:
Giving the following information:
Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.
<u>Sales:</u>
March= $16,300
April= $32,600
<u>Cash collection April:</u>
Sales on account from April= 32,600*0.25= 8,150
Sales on account from March= 16,300*0.75= 12,225
Total cash collection= $20,375
Answer: 50400
Explanation:
- Straight-line rate= 100%/ 5 years= 20%
- Double declining Expense= 20% x 2= 40%
From Oct1 to Dec 31 is 9 months/ 12 months a year
- Depreciation Expense year 1= $120000x 0.4x 9/12= $36000
- Book value year 1= beginning year 2= $120000-$36000= $84000
- Book value year 2= $84000- ($84000x0.4)= $50400