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sesenic [268]
2 years ago
7

Gulf Coast Tours currently has a weighted average cost of capital of 12.4 percent based on a combination of debt and equity fina

ncing. The firm has no preferred stock. The current debt-equity ratio is .47 and the aftertax cost of debt is 6.1 percent. The company just hired a new president who is considering eliminating all debt financing. All else constant, what will the firm's cost of capital be if the firm switches to an all-equity firm?
Business
1 answer:
Alex Ar [27]2 years ago
8 0

Answer:

15.36 percent.

Explanation:

WACC= We * Ke + Wd * Kd

Where,

We = Weight of equity

Wd = Weight of debt

Ke = Cost of equity

Kd = Post tax cost of debt = 6.1%

0.124 = (1/1.47)(x) + (0.47/1.47)(0.061)

The right hand side of the equation was solved using the Least common factor method.

O.124 =( X + 0.02867)/1.47

0.124 x 1.47 = X + 0.02867

0.18228 - 0.02867 = X

0.15361 = X

0.1536 × 100

= 15.36

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Based on predicted production of 21,000 units, a company anticipates $357,000 of fixed costs and $309,750 of variable costs. the
Alinara [238K]
Calculate fixed cost per unit
357,000÷21,000=17 per unit
Fixed cost for 19000 units
17×19,000=323,000

Calculate variable cost per unit
309,750÷21,000=14.75
variable cost for 19000 units
14.75×19,000=280,250

So the answer is
$323,000 fixed and $280,250 variable

Hope it helps!
8 0
2 years ago
calculate the unadjusted rate of return for an investment that has a net cost of $430,000 and should provide an average after-ta
Elden [556K]

9%, as the unadjusted rate of return is equal to the average yearly net income growth rate divided by the initial investment's net cost.

<h3>Calculation:</h3>

$40,090 divided by $430,00 is.093 * 100, or 9%.

<h3>If the needed rate of return is 6%, what is the present value of a cash inflow of $2,000 five years from now? Examine later?</h3>

$2600 will be given to the recipient after five years.

<h3>If the internal rate of return is 5% and the desired rate of return is 6%, should management accept the investment opportunity?</h3>

No, as the internal rate of return on the investment is lower than the intended rate of return.

To know more about unadjusted rate visit:-

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3 0
1 year ago
A good economic theory is best described as one that:: A. Is true. B. Realistically depicts the real world economists are trying
ollegr [7]

Answer:

b.

Explanation:

thats my answer my module

8 0
2 years ago
6. Suppose that the returns on the stock fund presented in Spreadsheet 6.1 were 240%, 214%, 17%, and 33% in the four scenarios.
Basile [38]

Answer:

Explanation:

Base on the scenario been described in the question, stock variance refers to the volatility that arises from the average. Volatility shows the degree of risk that will be helpful in determining the level of risk an investor should take while purchasing a particular security.

5 0
2 years ago
On June 30, 20X5, Mill Corp. incurred a $100,000 net loss from disposal of a business segment. Also, on June 30, 20X5, Mill paid
OleMash [197]

Answer:

$120,000

Explanation:

Total amount for inclusion in determining Mill Corp's net income or loss is as follows.

  • Net loss from disposal of business segment = $100,000
  • Property tax for 6 months to June 30, 20x5= $40,000 * 0.5 = $20,000

Therefore, total amount for inclusion = $100,000 + $20,000 = $120,000.

3 0
2 years ago
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