Answer:
Before tax cost of debt is 7.12%
After tax cost of debt is 4.27%
Cost of equity is 10%
Explanation:
The before-tax cost of debt can be determined using excel rate formula as found below:
=rate(nper,pmt,-pv,fv)
nper is the number of semiannual payments the bond has i.e 20*2=40
pmt is the amount of semiannual payment=$1000*7.5%*6/12=$ 37.50
pv is the current price =$1000*104%=$1,040.00
fv is the face value of $1000
=rate(40,37.50,-1040,1000)=3.56%
The 3.56% is semiannual yield, hence 7.12% per year (3.56%*2)
After-tax cost of debt=7.12%*(1-t) where is the tax rate of 40% or 0.4
after-tax cost of debt=7.12%*(1-0.40)=4.27%
Cost of equity is determined using the below CAPM formula:
Ke=Rf+Beta*(Mr-Rf)
Rf is the risk free rate of 4%
Beta is 1.2
Mr is the market return of 9%
Ke=4%+1.2(9%-4%)=10.00%
Answer:
Results are below.
Explanation:
Giving the following information:
Company 1:
Beginning inventory Merchandise $253,000
Cost of purchases 600,000
Ending inventory Merchandise 153,000
Company 2:
Beginning Finished goods $506,000
Cost of goods manufactured 930,000
Ending Finished goods 147,000
<u>To calculate the cost of goods sold, we need to use the following formula:</u>
<u></u>
COGS= beginning finished inventory + cost of goods manufactured/purchased - ending finished inventory
<u>Company 1:</u>
COGS= 253,000 + 600,000 - 153,000
COGS= $700,000
<u>Company 2:</u>
COGS= 506,000 + 930,000 - 147,000
COGS= $1,289,000
Answer:
A. A balance sheet shows the total assets, liabilities, and owner's
equity at the end of the period
Explanation:
As we know that
The income statement recognized only the income earned and expenses incurred of an organization
While on the other hand the balance sheet shows the financial position, profitability of the company. It involves assets, liabilities and stockholder equity
So according to the given options, the option A is correct
hence, the rest of the options would be incorrect
Answer:
a) should install the solar cells
alternative 1, solar cells
initial investment $18,000
annual expenses $2,400 (5 years)
NPV = $27,097.89
AW = (10% x $27,097.89) / [1 - (1 + 10%)⁻⁵] = $7,148.36
alternative 2, power line
initial investment $27,500
annual expenses $1,000 (5 years)
NPV = $31,290.79
AW = (10% x $31,290.79) / [1 - (1 + 10%)⁻⁵] = $8,254.43
b) $23,307.10
