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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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Trail Runner guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately
polet [3.4K]

Answer:

1. Record the​ sales, warranty ​expense, and warranty payments for the company. Ignore cost of goods sold.

To record sales during 2018:

Dr Cash 120,000

Dr Accounts receivable 480,000

    Cr Sales revenue 600,000

To record warranty liability:

Dr Warranty expense 30,000

    Cr Warranty payable 30,000

To record warranty related expenses:

Dr Warranty payable 10,000

    Cr Cash 10,000

Instead of cash it could have been wages payable, or repair parts inventory, but since we are not given any details, the safest thing is to assume cash payments.

2. Assume the Estimated Warranty Payable is​ $0 on January​ 1, 2018. Post the 2018 transactions to the Estimated Warranty Payable​ T-account. At the end of 2018 how much in Estimated Warranty Payable does the company​ owe?Use the​ T-account to determine the ending balance for the Estimated Warranty Payable account.

Ending balance of warranty payable account = $20,000

                                    Warranty Payable

                                   debit               credit

beg. bal.                         0                      0

warranty liability                                30,000

warranty costs            <u>10,000                         </u>

end. bal.                                             20,000

4 0
3 years ago
Which organization oversees GAAP for governmental organizations?
MissTica

Answer:

the Financial Accounting Standards Board or FASB for short so the answer is B

6 0
3 years ago
Retained earnings:40)A)Generally consists of a company's cumulative net income less any net losses and dividends declared since
levacccp [35]

Answer:

The correct answer is letter "A": Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

Explanation:

Retained Earnings is the portion of the net earnings of a company that it does not pay as dividends to stakeholders. The corporation retains this money and reinvests it or uses it to pay off a portion of its debt. <em>Retained earnings are calculated by taking the retained earnings at the beginning of the period and adding the current year's net income. Then, net losses are subtracted. The final result represents the retained earnings of the period.</em>

3 0
3 years ago
Analyze what happens to the market for KFC if the price of Mcdonald's burger falls.
ICE Princess25 [194]
Bruh nothing gonna happen cus chicken will never be beaten by McDonands.
7 0
3 years ago
In which investment category are fair values and subsequent growth of an investee not relevant for reporting?
Iteru [2.4K]

Answer:

The correct answer is <em>held-to-maturity securities</em>.

Explanation:

Securities held until expiration (HTM) are purchased to be held until expiration. The management of a company could invest in a bond that they plan to hold until they expire. As a result, there are different accounting treatments for retained securities until maturity compared to securities that must be settled in the short term.

4 0
3 years ago
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