When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is?

An increase in a firm's tax rate will__________ if the firm has debt capital in its capital structure:

Temka [501]

Answer:

d. decrease the firm's WACC.

Explanation:

As per WACC formula

WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )

By assuming the values to prove the answer

Weights

Common equity = 55%

Preferred Equity = 15%

Debt = 30%

Costs

Common equity = 15%

Preferred Equity = 8%

Debt = 12%

Tax rate is 15%

Placing values in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )

WACC = 8.25% + 3.06% + 1.2% = 12.51%

Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )

WACC = 8.25% + 2.7 + 1.2% = 12.15%

Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.

7 0

3 years ago

The Marchetti Soup Company entered into the following transactions during the month of June:

fiasKO [112]

Answer:

Explanation:

The journal entries are shown below:

1. Merchandise Inventory A/c Dr $200,000

To Account payable A/c $200,000

(Being the inventory purchased is recorded)

2. Salaries Expense A/c Dr $51,000

To Cash A/c $51,000

(Being salaries expenses are paid for cash)

3. Cost of goods sold A/c Dr $142,000

To Merchandise Inventory $142,000

(Being the merchandise is sold for cost)

Accounts receivable A/c Dr $255,000

To Sales revenue A/c $255,00

(Being the merchandise is sold on credit)

4. Cash A/c Dr $235,000

To Accounts receivable A/c $235,000

(Being the cash is collected)

5. Accounts payable A/c Dr 180,000

To Cash A/c 180,000

(Being cash is paid)

3 0

3 years ago

Levine Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%. What is the investm

NISA [10]

Answer:

A)0.67

Explanation:

Coefficient of variation can be regarded as the method that is usually devices in the assessment of the total risk per unit of return in a particular investment.

To calculate the investment's coefficient of variation, we use the expresion below

Coefficient of variation = standard deviation/expected return.

Given:

expected return = 15%

standard deviation = 10%.

Coefficient of variation =10/15

= 0.67

Hence, the investment's coefficient of variation is 0.67

7 0

3 years ago

An engineer wishes to have $3 million by the time he retires in 35 years. Assuming 8% nominal interest, compounded continuously,

Genrish500 [490]

Answer:

annual sum must he set aside $16209.42

Explanation:

given data

engineer wishes = $3 million

retires time = 35 years

nominal interest = 8%

solution

we get here effective annual rate that is

interest rate = $e^{r} - 1$ ...........1

interest rate = $e^{0.08} - 1$

interest rate = 0.08328 = 8.33%

and

now we get annual sum must he set aside that is

amount = $3 million × $\frac{rate}{(1+rate)^{t}-1}$

amount = $3000000 × $\frac{0.0832}{(1+0.0832)^{35}-1}$

amount = $16209.42

5 0

3 years ago

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth.The

Tomtit [17]

Answer:

The correct answer is: neither the first nor the second would promote growth.

Explanation:

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth.The first is to increase barriers to trade.The second is to restrict foreign portfolio investment.Which of these policies would most economist think would promote growth

One of the main statistical indicators used to measure the economic evolution of a country is the Gross Domestic Product (GDP). In the macroeconomic analysis of any State, the interpretation of this value is essential to know the degree of economic development and its trends.

The weak growth of productivity in many advanced and emerging market economies after the international financial crisis is raising concerns about growth prospects. A new study indicates that reducing barriers to international trade and foreign direct investment (FDI) could stimulate productivity and output.

The entry of portfolio investment into the country is associated with the yield and risk differentials of the country abroad. This means that a change in the perception of country risk is not necessary. Rather, they need to change in relation to existing alternatives in other countries. Therefore, significant movements in this area do not necessarily reflect a change in the state of the country's economy, however, they can have important repercussions on the exchange rate and other fundamental variables of the financial markets.

7 0

4 years ago