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zimovet [89]
3 years ago
6

The weighted-average cost of capital for a firm with a 65/35 debt/equity split, 8% pre-tax cost of debt, 15% cost of equity, and

a 35% tax rate is
Business
1 answer:
Vinil7 [7]3 years ago
8 0

Answer:

weighted-average cost of capital is 11.57 %

Explanation:

Weighted Average Cost of Capital (WACC) is the return that is required by providers of long term permanent sources of capital.

WACC = Weight of Equity × Cost of Equity + Weight of Debt × After tax cost of debt.

where,

After tax cost of debt = interest × ( 1 - tax rate)

                                     = 8% × (1 - 0.35)

                                     = 5.20 %

Therefore,

WACC = 0.65 × 15% + 0.35 × 5.20 %

           = 11.57 %

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Roman55 [17]

Hello there!

A real estate developer job is to get houses to sell them, get land to build houses and sell them, and get previous owned houses and sell them. They pretty much get property and sell it. As a real estate developer, the main goal that someone should have is to <u>make more money than they paid for the property</u>. This means that they would need to be making profit in order to really see a progress in income.

Let's give you an example when a real estate developer buys a house:

Johan, a real estate developer, bought a house $275,000. He then goes on a website and advertises the house for $285,000.

What Johan is trying to do here is make profit form the house he just purchased, since the extra money he will be getting if the house is sold will be a surplus to the original amount.

Let's give you an example when a real estate developer buys land:

Susan buys 1 acre of land for $1.2 million, she then has a construction crew build a house, and that costed her $750,000.

At the end of the day, Susan spent $1.95 million (1,950,000) on the house in total.

She then sells the house on a website for $2.5 million (2,500,000).

This means that Susan made a surplus of $550,000 from the price she originally payed for.

It's best when a real estate developer sells property for more than what they payed for, so they would be making profit (extra money). It's bad when a real estate developer tries to sell a house for lower than they originally payed for, then they would be losing money. That's why when there is a specific price for a house, a real estate developer usually doesn't want to drop the price of the house any cheaper; they want to stick with their price so they could make money.

A real estate developer could also start their own company, and make more profit if they stick to the trick of selling the property for more than what they paid for. If they stick to the trick, then they would be making even more money since they would have multiple people in a company doing it all at once, in different places too.

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morpeh [17]
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4 0
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Svet_ta [14]
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5 0
3 years ago
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jolli1 [7]

Answer:

National savings are repaid domestically, whereas capital inflows are repaid to a foreigner.

Explanation:

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6 0
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astra-53 [7]

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8 0
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