Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%
Answer:
(D) decrease revenues and decrease assets
Explanation:
Since the revenue is unearned, its entry in the books needs to be reversed.
When a revenue was recorded in the books, the like journal entry would have been.
Debit Cash/Bank/Receivables Account (thus increasing asset)
Credit Revenue Account (thus increasing revenue)
There, reversing the entry will involve decreasing revenue and decreasing asset.
Answer:
The answer is True.
Explanation:
Income statement ultimately shows the profit or the loss of the Organizational activities.
The data used in the preparation of the income statement are based on the accounting information are are always based on accounting information.
Answer: decreases
Explanation: In simple words, complementary goods are those goods which have negative relation with each other in respect of price and demand. The usage of one good is dependent on other in case of complementary relation.
For example - Petrol and petrol car are complementary goods, if the price of petrol increases the demand for petrol cars will decrease.
Hence we can conclude that the right answer to the given problem is decrease.
