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My name is Ann [436]
3 years ago
9

Downtown Stores can issue equity at a flotation cost of 8.76 percent and debt at 5.93 percent. The firm currently has a debt-equ

ity ratio of .37 but prefers a ratio of .35. What should this firm use as their weighted average flotation cost
Business
1 answer:
Reil [10]3 years ago
4 0

Answer:

8.03%

Explanation:

The computation is shown below:

We know that

Total capital = Debt + Equity

= 0.35 + 1

= 1.35

Now  

Weight of debt(Wd) = Value of debt ÷ Total capital

= 0.35 ÷ 1.35

Weight of equity(We) = 1 ÷ 1.35

Now Weighted average flotation cost is:

= Flotation cost of equity × weight of equity + Flotation cost of debt × Weight of debt

= (8.76% × 1 ÷ 1.35) + (5.93% × 0.35 ÷ 1.35)

= 8.03%

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Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials a
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Solution:

Instructions Journalize the April transactions:

Date                           Account Titles and Explanation

4/30                              Work in Process—Cooking

                                     Work in Process—Canning

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4/30                              Work in Process—Cooking

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                                                              Factory Labor

4/30                             Work in Process—Cooking

                                   Work in Process—Canning

                                                  Manufacturing Overhead

4/30                             Work in Process—Canning

                                    Work in Process—Cooking

Cooking and out the debits

Debit                               Credit          

22,800

10,900                             33,700      

9,400

7,230                              16,630

33,800

28,100                            61,900

55,900                          

                                      55,900

6 0
3 years ago
Which of the following line items will appear on the income statement of a merchandiser but not of a service​ company?A. Supplie
nekit [7.7K]

Answer:

D. Cost of Goods Sold

Explanation:

The cost of goods sold or simply COGS is a numerical representation of the direct expenses incurred in manufacturing products sold to customers in a period. It is the aggregate of direct labor, direct materials, and overheads used in the production process. COGS apply to manufacturing firms and companies that handle physical goods.

The COGS is deducted from the sales revenue to give the gross profit. Calculating the COGS involves adding the purchases or goods manufactured to the beginning inventory. Ending inventory is deducted from the total to provide the COGS.  As per the formula, the COGS does not apply to the service industry.

3 0
3 years ago
Buster industries pays weekly salaries of $17,800 on friday for a five-day week ending on that day. the adjusting entry necessar
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6 0
3 years ago
Big Red Machines, a startup, has come up with a new product and has seen significant customer demand. Due to reinvestment in the
Bad White [126]

Answer:

The correct answer is "$ 30.34".

Explanation:

The value of the stock can be computed by the following formula:

⇒  \frac{Dividend \ in \ year \ 3}{(1 + Required \ return \ rate)2}  + \frac{Dividend \ in \ year \ 4}{(1 + Required \ return \ rate)3}  + \frac{Dividend \ in \ year \ 5}{(1 + Required \ return \ rate) 4 } + \frac{1}{(1 + Required \ return \ rate)4 }\times [\frac{( Dividend \ in \ year \ 5 (1 + Growth \ rate)} {( Required \ return \ rate - Growth \ rate)}]

On putting the values, we get

⇒  \frac{1.50}{1.08^2}  + \frac{1.60}{1.08^3}  + \frac{1.75}{1.08^4 } + \frac{1}{1.08^4} \times [  \frac{( 1.75\times 1.03)}{(0.08 - 0.03)}]

⇒  \frac{1.50}{1.08^2 } + \frac{1.60}{ 1.08^3 } + \frac{37.80}{ 1.08^4  }

⇒  30.34 ($)

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