1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
seraphim [82]
3 years ago
9

Frieda Inc. is considering a capital expansion project. The initial investment of undertaking this project is $105,500. This exp

ansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $22,500, $25,800, $33,000, $45,936 and $58,500 respectively. Frieda has a capital structure consisting of 20% debt and 80% equity. The after-tax cost of debt is 16% and the cost of equity is 18.5%.
What is Frieda%u2019s weighted average cost of capital?
a. 16%
b. 18%
c. 24%
d. 22%
Business
1 answer:
Nana76 [90]3 years ago
7 0

Answer:

WACC = 0.18 or 18%

Option b is the correct answer.

Explanation:

The WACC or weighted average cost of capital is the cost of a firm's capital structure that can contain one or more of the following components, namely debt, preferred stock and common equity. The formula to calculate the WACC is as follows,

WACC = wD * rD * (1-tax rate)  +  wP * rP  +  wE * rE

Where,

  • w represents the weight of each component
  • D, P and E represents debt, preferred stock and common equity respectively
  • r represents the cost of each component
  • rD * (1-tax rate) represents the after tax cost of debt

WACC = 0.2 * 0.16   +   0.8 * 0.185

WACC = 0.18 or 18%

You might be interested in
When creating your résumé, you should
charle [14.2K]

Answer:

D

Explanation:

I cannot explain

8 0
3 years ago
Read 2 more answers
Which of the following is not included in GDP?the payments for a chiropractor's servicescash income paid to a day laborer that i
Scilla [17]

Answer:

cash income paid to a day laborer that is not reported to the tax authorities

Explanation:

GDP stands for Gross domestic product. It is the  monetary value of all finished goods and services made within a country during a specific period.

It is calculated as GDP = private consumption + gross investment + government investment + government spending + (exports – imports).

Hence, cash income paid to a day laborer that is not reported to the tax authorities will not be included in GDP

8 0
3 years ago
Once Arnold Patel had decided he wanted to quit working as a Web designer for a large advertising agency and go into some kind o
Orlov [11]
The correct answer is letter "E": find the idea for his business.
Explanation:
There are no set of steps or books that could determine when entrepreneurs could start a business or not. Most ventures are engaged by recognizing an opportunity and matching it with strengths individuals have that could make the plan work. Proper assessment and partnership are vital in this stage for the venture not to be affected by the initial challenges of entering into a market.
If Arnold has found he has an entrepreneurial spirit, then, he should spot different opportunities in the market for him to take one and develop a business idea.
5 0
2 years ago
In the small country of Economerica, there are 6 thousand people employed, 1 thousand people unemployed, and 3 thousand people o
irakobra [83]

Answer: B. 20.00%

Explanation:

Unemployment rate does not include those who have given up on finding a job.

Unemployment rate = Unemployed people / Labor force

Unemployed people:

= Original unemployed + half the new graduates

= 1,000 + (1,000 / 2)

= 1,500 people

Labor force:

= Unemployed + employed people

= 1,500 + 6,000

= 7,500 people

Unemployment rate:

= 1,500 / 7,500

= 20%

3 0
2 years ago
Paula receives a nonliquidating distribution from Pell Corporation. Paula’s basis for her Pell stock is $10,000. In exchange for
Juliette [100K]

Answer: $13000

Explanation:

From the question, we are told that Paula receives a nonliquidating distribution from Pell Corporation. Paula’s basis for her Pell stock is $10,000 and in exchange for her stock, Paula receives real estate with an $8,000 basis and a $15,000 fair market value that is subject to a $2,000 mortgage.

The amount of Paula’s basis in the real estate she received will be the net fair market value of the real Estate. It should be noted that this is the difference between the market value and the mortgage amount. This will be:

= $15,000 - $2,000

= $13,000

6 0
3 years ago
Other questions:
  • An industrial union is characterized by which one of the following?
    8·1 answer
  • When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the bui
    6·1 answer
  • Imagine yourself as a business owner just before an economic event such as a recession or depression. What impact would
    8·1 answer
  • During the year, Apex Co. sold an unprofitable component of the company. The component had a net loss from operations during the
    12·1 answer
  • Johnson & Johnson was found guilty of misrepresenting a hip-replacement device. Executives knew there was a problem with the
    10·1 answer
  • How do u mark brainlist pls? hurry
    6·1 answer
  • Presented below is information related to Vaughn Company. Cost Retail Beginning inventory $252,960 $281,000 Purchases 1,368,000
    12·1 answer
  • Smythe Co. makes furniture. The following data are taken from its production plans for the year.
    14·1 answer
  • What is the difference between an increase in supply and an increase in quantity supplied?.
    12·1 answer
  • Which of the following is not something that will help you pay off credit card debt? a. Stop using your credit cards. B. Make ex
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!