Answer:
Following are the complete solution in the attached file.
Step-by-step explanation:
Answer:
P(X>17) = 0.979
Step-by-step explanation:
Probability that a camera is defective, p = 3% = 3/100 = 0.03
20 cameras were randomly selected.i.e sample size, n = 20
Probability that a camera is working, q = 1 - p = 1 - 0.03 = 0.97
Probability that more than 17 cameras are working P ( X > 17)
This is a binomial distribution P(X = r)
P(X>17) = P(X=18) + P(X=19) + P(X=20)
P(X=18) =
P(X=18) =
P(X=18) = 0.0988
P(X=19) =
P(X=19) =
P(X=19) = 0.3364
P(X=20) =
P(X=20) =
P(X=20) = 0.5438
P(X>17) = 0.0988 + 0.3364 + 0.5438
P(X>17) = 0.979
The probability that there are more than 17 working cameras should be 0.979 for the company to accept the whole batch
Beta= 1.3
Debt to equity ratio= 0.4
Market rate of return= 11.6%
= 11.6/100
= 0.116
Tax rate= 32%
= 32/100
= 0.32
Risk free rate= 3.3%
= 3.3/100
= 0.033
Pretax cost of debt= 7.2%
= 7.2/100
= 0.072
The firm's WACC can be calacluated as follows
RS= 0.033+1.3(0.116-0.033)
= 0.033+1.3(0.083)
= 0.033+0.1079
= 0.1409
WACC= (1/1.4)(0.1409)+(2/1.4) (0.072)(1-0.32)
= (0.7142)(0.1409) + (1.4285)(0.072)(0.68)
= 0.1006+0.0699
= 0.1705(100)
= 17.05%
Hence the firm's WACC is 17.05%