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fiasKO [112]
2 years ago
15

A firm uses only debt and equity in its capital structure. The firm's weight of equity is 70 percent. The firm's cost of equity

is 13 percent and it has a tax rate of 30 percent. If the firm's WACC is 11 percent, what is the firm's before-tax cost of debt?
a) 7.17 percent
b) 9.05 percent
c) 6.38 percent
d) 5.36 percent
Business
1 answer:
aliina [53]2 years ago
7 0

Answer:

b) 9.05 percent

Explanation:

The computation of the firm before tax cost of debt is shown below:

The Weight of debt is

= 100 - 70

=30%

Now  

WACC = Respective cost × Respective weight

11 = (0.7 × 13) + (0.3 × Cost of debt)

11 = 9.1 + (0.3 × Cost of debt)

Cost of debt = (11 - 9.1) ÷ 0.3

= 6.333%(Approx)

Now

Pre-tax Cost of debt is

= Cost of debt ÷ (1 - tax rate)

= 6.333 ÷ (1 - 0.3)

= 9.05%

hence, the correct option is b.

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Answer:

False

Explanation:

In this scenario, the natural rate of unemployment would be 5% = 3% of frictional unemployment plus 2% of cyclical unemployment. The other type of unemployment that is part of the natural rate is not referenced in the question (surplus unemployment).

Cyclical unemployment is not added up because it is not part of natural unemployment.

In fact, what natural unemployment basically is, is unemployment that does not depend on business cycle, that is not cyclical. In that sense, cyclical unemployment is totally the opposite to natural unemployment, and you only reach a rate of natural unemployment, when cyclical unemployment is eliminated in a healthy economy.

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3 years ago
Pattison Corporation is a service company that measures its output by the number of customers served. The company has provided t
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Answer:

B. $1,500 F

Explanation:

                                          Flexible    Planning     Activity  

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Workings

<u>Travel Expense </u>at 500q

Flexible budget = 500 * (17) = $8,500

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When tests are used as part of the selection process, care must be taken to ensure that the test being used is both valid and re
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Option C. When tests are used as part of the selection process, care must be taken to ensure that the test being used is both valid and reliable. A test is reliable if it consistently creates or measures accurate results time after time.

<h3>What is meant by reliability?</h3>

This is the term that is used to refer to the fact that the test is consistent and if it is replicated over and over again it is still going to keep producing the same results as it first did.

Reliability is one of the attributes or characteristics of a good test or research. Hence we can conclude that  When tests are used as part of the selection process, care must be taken to ensure that the test being used is both valid and reliable. A test is reliable if it consistently creates or measures accurate results time after time.

Reda more on reliability here: brainly.com/question/1265793

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1 year ago
Can I Plss get some help on this
AlladinOne [14]

The law of supply illustrates all the quantities of goods that producers are willing and able to sell at every possible price.

<h3>What is the law of supply?</h3>

The law of supply states that when prices increase, the quantity supplied increases and when price falls, the quantity supplied falls. This shows that price and quantity supplied are positively related. This explains why the supply curve is positively sloped.

To learn more about the law of supply, please check: brainly.com/question/26374465

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7 0
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