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OverLord2011 [107]
3 years ago
7

Assume your company’s capital structure is 75% equity and 25% debt. The bank will loan you money at 6% interest, net of tax, and

your only shareholder wants to achieve at least a 20% return on her investment. What is your Weighted Average Cost of Capital (WACC)?
Business
1 answer:
lara [203]3 years ago
6 0

Answer:

WACC is 16.5%

Explanation:

Given:

Weight of equity is 75% or 0.75

Weight of debt is 25% or 0.25

Total value of firm is 1 (0.75 + 0.25)

Cost of debt is 6% or 0.06

Cost of equity is 20% or 0.2

WACC = (weight of debt × cost of debt) + (weight of equity × cost of equity)

           = (0.25 × 0.06) + (0.75 × 0.2)

           = 0.165 or 16.5%

Therefore WACC is 16.5%

           

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Break-Even Point
11111nata11111 [884]

Answer:

The right answer is:

(a) 5916 units

(b) 5046 units

Explanation:

Given:

Sales,

= $59

Variable cost,

= $30

Fixed cost,

= $171,564

Increased sale,

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Now,

(a)

Contribution margin will be:

= Sales - Variable \ cost

= 59-30

= 29 \ per \ unit ($)

hence,

Breakeven will be:

= \frac{Fixed \ cost}{Contribution \ margin}

= \frac{171564}{29}

= 5916 \ units

(b)

Contribution margin will be:

= Sales-Variable \ cost

= 64-30

= 34 \ per \ unit ($)

hence,

Breakeven will be:

= \frac{Fixed \ cost}{Contribution \ margin}

= \frac{171564}{34}

= 5046 \ units

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You just purchased two coins at a price of $790 each. Because one of the coins is more collectible, you believe that its value w
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Answer:

$3,233.12

Explanation:

Data given in the question

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