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RoseWind [281]
3 years ago
11

Sixx AM Manufacturing has a target debt—equity ratio of 0.55. Its cost of equity is 16 percent, and its cost of debt is 10 perce

nt. If the tax rate is 33 percent, what is the company's WACC?
Business
1 answer:
Natalija [7]3 years ago
8 0

Answer:

WACC = Ke(E/V) + Kd(D/V)(1-T)

WACC = 16(100/155) + 10(55/155)(1-0.33)

WACC = 10.3226 + 2.3774

WACC = 12.7%

Explanation:

WACC is a function of cost of equity and proportion of equity in the capital structure  plus after-tax cost of debt and proportion of debt in the capital structure. Since debt-equity ratio is 0.55(55/100), it implies that the total value of the firm is 55 + 100 = 155. Thus, debt proportion will be 55/155 while equity proportion is 100/155.

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Analysts collect, interpret, and use complex data to develop actionable steps to improve processes and optimize results. Every day, he or she assesses company and customer needs, obtains actionable information, and analyzes it to look for obvious trends and areas for improvement.

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1 year ago
select all of the statements that discuss one of the problems with price gouging laws that prevent prices from rising to the new
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The problems with price gouging laws that keep prices low are:

  1. Price gouging laws do nothing to address the underlying issues that cause shortages after a disaster. In fact, they often make the problem worse.
  2. When prices rise after a disaster, producers are encouraged to produce more of the good and bring it to the disaster area; price gouging laws short circuit this effect.

Here are the options to this questions:

  1. Price gouging laws reduce shortages after a disaster by keeping prices low.
  2. Price gouging laws do nothing to address the underlying issues that cause shortages after a disaster. In fact, they often make the problem worse.
  3. When prices rise after a disaster, producers are encouraged to produce more of the good and bring it to the disaster area; price gouging laws short circuit this effect.
  4. When prices rise after a disaster, consumers are encouraged to consume less of the good and leave some for others to purchase; price gouging laws short circuit this effect.
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Price gouging is when the price of a good or a service is increased to very high levels when the demand for the product is higher than the supply of the product. Price gouging usually occurs after an event. For example, after a natural disaster.

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To start with, quotas is a restriction imposed by a government. Quotas limits the quantity of a good that can be imported into a country during a specific period of time. In this question, an import license specifies the quantity of Sugar that be brought into (imported) the USA.

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