Answer:
Explanation:
For each situation, identify the possible root cause or causes of activity cost, among these:
1. Plant Layout
2. Process design
3. Product design
(A) PROCESS DESIGN
The design of the process of production is the root cause of activity cost here. From the rates given, it's clear that the manual method of production costs more time and money than the mechanical production method.
A minor cause of activity cost here is the PRODUCT DESIGN; the cost of which varies with the use of labour and the use of machine.
(B) PRODUCT DESIGN
Change in design of the gear (removal of some component parts) reduces set up time and cost.
(C) PLANT LAYOUT
Redesign of manufacturing plant saves the time and cost of moves.
Tax savings generated from deductions are considered cash inflows.
Answer: false
Hope this helps
To solve this problem, we will use a valuation method
named income valuation includes discounting of the profits the stock will
carry to the stockholder in the probable future, and a final value on disposal.
Solution:
1.57 (1.05) / (.14 - .05)
= 18.32. the answer is letter d.
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Answer: 12.5%
Explanation:
Amount that will be raised with Equity = 65% * 5,700,000 = $3,705,000
This is more than the retained earnings so new equity will have to be issued at cost of 16%
Amount raised by debt = 35% * 5,700,000 = $1,995,000
Less than $2 million so cost of debt is 10%
WACC = cost of equity * weight of equity + weight of debt * cost of debt * ( 1 - tax rate)
= (16% * 65% ) + (35% * 10% * (1 - 40% tax))
= 12.5%
