Answer:
Expected return on equity is 11.33%
Explanation:
Using Weighted Average Cost Capital without tax formula, overall rate of return is given by the formula:
WACC=(Ke*E/V)+(Kd*D/V)
Kd is the cost of debt at 6%
Ke is the cost of equity at 12%
D/E=1/2 which means debt is 1 and equity is 2
D/V=debt/debt+equity=1/1+2=1/3
E/V=equity/debt+equity=2/1+2=2/3
WACC=(12%*2/3)+(6%*1/3)
WACC=10%
If the firm reduces debt-equity ratio to 1/3,1 is for debt 3 is for equity
D/V=debt/debt+equity=1/1+3=1/4
E/V=equity/debt+equity=3/1+3=3/4
WACC=10%
10%=(Ke*3/4)+(6%*1/4)
10%=(Ke*3/4)+1.5%
10%-1.5%=Ke*3/4
8.5%=Ke*3/4
8.5%=3Ke/4
8.5%*4=3 Ke
34%=3 Ke
Ke=34%/3
Ke=11.33%
Answer and Explanation:
The computation for each corrected common-size percent for each account is shown below:
Particulars Amount Percentage
Total assets $700,000 100%
Accounts payable $75,000 10.71%
($75,000 ÷ $700,000)
Bonds payable $225,000 32.14%
($225,000 ÷ $700,000)
Common stock $300,000 42.86%
($300,000 ÷ $700,000)
Retained earnings $100,000 14.29%
($100,000 ÷ $700,000)
Therefore each one of assetm liabilities and stockholder equity is presented as a percentage of total assets and the same is to be considered
Answer:
$10,500
Explanation:
Bee Inc.
Cash Budget for March
Budgeted Receipts $116,000
Les Budgeted Expenses ($110,000)
Net Cash $6,000
Add Budgeted Beginning Balance $35,000
Balance $41,000
Loan ($51,500 - $41,000) $10,500
therefore,
To attain its desired ending cash balance for March, the company needs to borrow $10,500
Answer:
The equivalent units produced is 7320
Explanation:
To get the units produced in this period we ignore the beginning inventory, we just add new transferred out +ending inventory
- 7,000 units were transferred out
- Al the end , we have 800 at 40%= 320
Adding the 3 items
UP=7000+320=7320
Answer:
$726,370.51
Explanation:
The present value of the contract is the sum of the discounted cash flows.
Present value can be calculated using a financial calculator:
Cash flow in year 0 = $250,000
Cash flow in year 1 = $200,000
Cash flow in year 2 = $400,000
Discount rate = 15%
Present value = $726,370.51
I hope my answer helps you
