Answer:
WACC = 11.6%
Explanation:
<em>The weighted average cost of capital (WACC) is the average cost of all the various sources of long-term finance used by a business weighted according to the proportion which each source of finance bears to the the entire pool of fund. </em>
To calculate the weighted average cost of capital, follow the steps below:
<em>Step 1: Calculate cost of individual source of finance </em>
Cost of Equity= 13.5%
After-tax cost of debt:
= (1- T) × before-tax cost of debt
= 7%× (1-0.4)= 4.2%
<em>Step 2 : calculate the proportion or weight of the individual source of finance . (This already given) </em>
Equity = 80%
Debt= 20%
<em>Step 3:Work out weighted average cost of capital (WACC) </em>
WACC = ( 13.5%× 80%) + ( 4.2%× 20%) = 11.64%
WACC = 11.6%
Answer:
D. $242,200
Explanation:
The variable cost is that cost which is changes when there is a change in the level of production.
It includes the direct material cost, direct labor cost, factory supplies, etc
The computation of the total variable cost is shown below:
= Direct material cost + direct labor cost + packaging cost
= $85,000 + $138,000 + $19,200
= $242,200
Therefore we included these three cost for the calculation of the variable cost
Answer:
The offer price will be $55.51
Explanation:
The constant cash flow over a indefinite period of time is the perpetuity. The dividend payment on the preferred is also considered as perpetuity because it pays the constant amount of dividend and there is no time limit for the payment.
Value of the preferred share can be determine by following formula
Value of Perpetuity / Cash flow / required rate of return
Price of share = Dividend Payment / Rate of return
Price of share = $6.8 / 12.25% = $55.51
Answer: Statement C
Explanation: Selection system is the most important system in an organization as it is related to employing the most important asset, that is, human resource.
If a firm wants to become a high performance, the employees working in it must be efficient in their jobs and it is dependent on selection process.
If the recruiter keeps the process of recruitment completely job related and legal checks are done then it can lead to high performance.
Answer:
Real GDP @ Constant Prices , Nominal GDP @ Current Prices
Explanation:
GDP is sum total of gross value of goods produced by an economy in its domestic territory during a given period of time (financial year) .
'Value' = Price X Quantity .
Nominal GDP takes current year prices to calculate GDP , Real GDP Constant (Base Year prices) to calculate GDP. So - Real GDP is a better measure of Economic Growth because it changes only due to change in 'quantity' of pr0duction (prices same) , but - Nomial GDP is a worse measure of Economic growth because it changes not only with 'quantity' of production & also with price change only (current price) .
Hence , Real GDP is also better for time series or Cross sectional Comparison .
However , Nominal GDP can be converted into Real GDP using GDP Deflator
( Nominal GDP / Real GDP ) x 100
