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Dahasolnce [82]
3 years ago
15

The shareholders need to earn 20%. The firm can borrow at 5%. The risk free rate is 2%. The tax rate is 40%. Find the weighted a

verage cost of capital.
Business
1 answer:
lbvjy [14]3 years ago
3 0

Answer:

11.5%

Explanation:

The computation of the weighted average cost of capital is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of  common stock) × (cost of common stock)

= (0.50 × 5%) × ( 1 - 40%) +  (0.50 × 20%)

= 1.5% + 10%

= 11.5%

Basically we multiplied the weightage of capital structure with its cost so that the weighted average cost of capital could come

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1. Identify and describe two incremental cash flows from a proposed project such as expanding a product line or launching a new
Mazyrski [523]

Answer:

Explanation:

1. Incremental cash flow is the potential increase or decrease in cash flow from an investment this could be positive or negative.

In this case in expanding a product line or launching a new project incremental cash flow could be.

a. Positive: this is the increase in cash flow due to the product launch and expansion.

b. Negative: this is the decrease in cash flow due to the product launch and expansion

2. a. Payback:

profit gotten from an initial investment equal to what was initially invested

b. Net Present Value(NPV)

This is the difference between present value of income and present value of expenditure over a period of time.

c. Internal Rate of Return(IRR)

Measure the rates of returns for an investment excluding external factors such as risk free rates, inflation e.t.c

d. Profitability Index Method (PIM)

this is the  lowest acceptable measures of the rates of returns for an investment excluding external factors such as risk free rates,inflation e.t.c

6 0
4 years ago
The following information pertains to Rik Co.'s two employees: Name Weekly salary Number of weeks worked in 2005 Vacation rights
Lapatulllka [165]

Answer: $1600

Explanation:

From the information given, it can be noted that while Ryan is vested, on the other hand, Todd isn't vested.

Therefore, since the vacation is for two weeks, the amount of vacation expense and liability should be reported will be for Ryan alone and this will be:

= $800 × 2

= $1600

In this case, service has already been rendered ans there's accumulated rights, therefore a vacation expense and liability of $1600 should be reported.

8 0
3 years ago
LO 6.3A company calculated the predetermined overhead based on an estimated overhead of $70,000, and the activity for the cost d
olya-2409 [2.1K]

Answer:

$68,600

Explanation:

An predetermined overhead of $70,000 was estimated for an activity of 2,500 hours. The actual overhead assigned to the products is given by multiplying the fraction of the total 2,500 hours of activity utilized by the products by the predetermined overhead:

A = \frac{1,350+1,100}{2,500}*\$70,000\\ A = \$68,600

The total amount of overhead assigned to the products is $68,600.

8 0
3 years ago
Absorption costing income would be ____ variable costing income. a. $150,000 less than b. $150,000 greater than c. $240,000 less
Dafna11 [192]

Answer:

E. None of the above

7 0
3 years ago
Road Hazards has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bon
Alexeev081 [22]

Answer:

At par

Explanation:

From the question we are informed about Road Hazards with has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. In this case these direct payments are a clear indication that the bonds can accurately be defined as being issued at par. A par bond can be regarded as bond that is been sold at the exact face value, most mind sells at the face value of $1000, that $1000 is the face value, any par bond usually give an investor a yield which matches the amount of coupon that is associated to the bond.

.

7 0
3 years ago
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