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AlexFokin [52]
3 years ago
10

Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is

6.50%, the yield on the preferred is 6.00%, the cost of common from reinvested earnings is 11.25%, and the tax rate is 25%. The firm will not be issuing any new common stock. What is Avery's WACC
Business
1 answer:
Andreyy893 years ago
8 0

Answer:

8.15%

Explanation:

The computation of the weighted average cost of capital as follows;

= After Cost of debt × weightage of debt + cost of preferred stock × weight of preferred stock + cost of common equity × weight of equity

= 6.50% × (1 - 0.40) × 35 ÷ 100 + 6% × 10 ÷ 100 + 11.25% × 55 ÷ 100

= 1.37% + 0.60% + 6.19%

= 8.15%

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The penalty for an IRA that is insufficient in amount is half of the undsitributed amount.

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5 0
3 years ago
Refer to the above data. At its profit-maximizing output, this firm's total revenue will be:______
ValentinkaMS [17]

Answer:

The question is incomplete. The complete is given below

OUTPUT PRICE MR TC MC

1                  100         100 100 30

2                     90 80 63 26

3                    80 60 52.67 32

4                     70 40 49.5 40

5                    60 20 49.6 50

6                      50 0 50 52

7                    40 -20 52.29 66

8                    30 -40 55.75 80

9                    20 -60 60.67 100

The total revenue is $280

Explanation:

Profit is maximized at the level of output where marginal revenue (MR) is equal marginal cost (MC).

Marginal revenue is the extra revenue made from selling one additional unit of a product. It is the increase in total revenue as result of selling one more unit. It is given in the third column above.

Marginal cost: It is the increase in total cost as a result  of producing extra one unit- it is given in the last column

Profit maximizing-output: The optimal level of output where marginal revenue is equal to marginal cost. It is the ascertained to be 4 under the first column above. At this level  MR $40 = MC $40

Profit maximizing price:  The selling price at the profit-maximizing output. It is $70 here.

Total revenue that maximized profit= profit-maximizing price × Profit maximizing-output

$70 × 4= $280

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4 years ago
Maurice Corporation has two major business segments; Philippe and Chip. In April, the Philippe business segment had sales revenu
kati45 [8]

Answer:

b.) $140,000

Explanation:

The computation of the segment margin is shown below:

Sales Revenue                                                 $500,000

Less: Variable Expenses                                 ($280,000)

Contribution Margin                                        $220,000

Less: Traceable fixed Expenses                     ($80,000)

Segment margin                                             $140,000

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