Answer:
The required return on the stock of Moes pizza is 10.4 percent and after tax required return on the company’s debt is 3.28 percent. The company’s market value capital structure consists of 65 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.5 percent. The tax rate is 35 percent.
Answer:
7.95%
Explanation:
the first step is to determine the present value of the 10 year annuity
= 7246.89
remaining balance of the 10,000 is invested in a 10-year certificates of deposit = 10,000 - 7246.89 = $2753.11
We would calculate the future value of this amount
The formula for calculating future value:
FV = P (1 + r/m)^mn
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding
$2753.11 x ( 1 + 0.09/4)^(4 x 10) = 6704.34
calculate the value of reinvestments
= 14783.60
14783.60 + 6704.34 = 10,000 ( 1 + er)^10
er = 0.0795 = 7.95%
Answer:
The factory overhead allocated per unit of Blinks is b.$19.50
Explanation:
It is Important to note that Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours.
A plant Wide Overhead rate is a function of the Total Overheads of a Company divided by the Total Labor Hours in the Company
<u>Total Overheads:</u>
Fabrication Department $84,000
Assembly Department $72,000
Total $156,000
<u>Total Labor Hours :</u>
Fabrication Department 0
Assembly Department ( 1,000 × 4) + (2,000×2) 8,000
Total 8,000
Note : <em>labor hours take place only in the Assembly Department</em>
<u>Plantwide overhead rate :</u>
Plantwide overhead rate = Total Overheads / Total Labor Hours
= $156,000 / 8,000
= $ 19.50
Answer:
<em>The monthly payments will be $353.12</em>
Explanation:
<u>Financing</u>
When a purchase is made at present value and the payment will be financed at a rate of interest i for n periods, the present value PV is
where R is the regular payment (usually monthly).
Solving for R
It's important to recall than only the unpaid amount goes financing, if some down-payment is made, it must be subtracted from the PV to be financed.
The present value of the car is 17,250 from which the buyer will make a 5% down-payment. It means that the real financing amount is
The rate of interest is
It also follows that n=54.
Computing R