Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%
<u>True.</u> Current market prices reflect all relevant information, whether it is known publicly or privately.
<h3><u>What does strong-form efficiency mean?</u></h3>
Strong form efficiency is the strictest interpretation of the efficient market hypothesis (EMH) investment theory, which claims that a stock's price takes into account all available information, whether it is public or private. Strong form efficiency advocates contend that even access to insider information cannot benefit an investment.
No matter how much study or information investors have access to, this level of market efficiency indicates that profits above typical returns cannot be realized. The majority of instances of strong form efficiency involve insider knowledge. This is due to the fact that the EMH's strong form efficiency is the sole component that incorporates confidential information.
Contrary to popular opinion, the idea contends, that possessing inside information won't help an investor achieve large market returns.
Learn more about the efficient market hypothesis (EMH) with the help of the given link:
brainly.com/question/20709287
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The first thing you should do to solve this problem is to know how much was the discount of the sunglasses.
We have then:
44.95 $ ---> 100%
26.97 $ ---> x
Clearing x:
x = (26.97 / 44.95) * 100 = 60%
therefore, the discount is
100-60 = 40%.
Then, the original price of the swimsuit will be
(28.95 $) * (1 + 0.40) = 40.53 $
answer:
the original price of a bathing suit that has a sale price of $ 28.95 is $ 40.53
Answer:
C) Overstating or understating allowances and reversing amounts in the future to smooth out net income over time.
Explanation:
Cookie jar reserve is defined as an accounting practice by businesses where the profit a company makes from successful years are reserved to cover up for years with losses. It balances losses from unsuccessful years.
Investors are led to believe that losses in bad years are less than they actually are.
For example not allocating an expense to a particular accounting year but instead allocating it to a year when the company made profits.
In essence it is overstating or understating allowances and reversing amounts in the future to smooth out net income over time.
Answer:
$43,000
Explanation:
Warranty expense for 2021 = $40.8 millions * 1%
Warranty expense for 2021 = $408,000
Balance in Liability on 31 Dec = Warranty Liability on 1 Jan + Warranty Expenses - Warranty Expense paid
Balance in Liability on 31 Dec = $88,000 + $408,000 - $453,000
Balance in Liability on 31 Dec = $43,000
So, the balance in the warranty liability account as of December 31, 2021 is $43,000.
