Answer:
a. Weighted average flotation cost
= FCE(E/V) + FCD(D/V)
= 7(100/170) + 4(70/170)
= 4.12 + 1.65
= 5.77%
V = E + D
V = 100 + 70 = 170
b. Flotation cost of debt financing
= 4% x $18 million
= $0.72 million
True cost of the building after taking flotation cost into account
= $18 million + $0.72
= $18.72
Explanation:
The weighted average flotation cost is the flotation cost of equity multiplied by the proportion of equity in the capital structure plus flotation cost of debt multiplied by proportion of debt in the capital structure. The total market value is 100 + 70 = 170. Since the debt-equity ratio is 0.7. Debt takes 70 while equity takes 100. The proportion of equity in the capital structure is 100/170 while the proportion of debt in the capital structure is 70/170.
Answer:
FALSE
Explanation:
It is False that the difference between operations and projects is that operations end when their objectives have been reached, whereas projects do not.
The reverse is true because projects are time-bound and they come to an end when their objectives have been achieved, but company operations are expected to continue as a going concern.
A project is an activity to meet the creation of a unique product or service, an thereafter terminates while operations are day to day routine activities that are expected to continue
Answer:
The major attraction of S corporations is that they avoid the problem of double taxation
Explanation:
Am S corporation is also called a small enterprise corporation that providers liability protection for its owners.
The business is considered.to.ba an independent entity, so if the corporation is liable to pay a judgement sum the owners will not be asked to use their personal funds to repay.
One key feature.os S corporation is that tax is passed along. The tax to be paid by the business is transfered to the owners.
So taxis only paid once. This avoids double taxation where the business is taxed and owner also taxed.
Answer:
False
Explanation:
What is a transportation company called?
- Courier companies are usually spin-offs from freight forwarders.
- There are various types of courier companies, such as airfreight courier companies or road couriers.
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Answer:
$288,500
Explanation:
Particulars Amount
Retained Earnings Dec 31, 2012 $306,800
Less: Net Loss for the Year $4,000
Less: Dividend declared and paid in 2013 <u>$14,300</u>
Retained Earnings Dec 31, 2013 <u>$288,500</u>
