Answer:
WACC 13.85600%
Explanation:
First we calculate Eastern Pizza CAPM:
risk free = 0.08
market rate = 0.12
premium market = (market rate - risk free) 0.04
beta(non diversifiable risk) = 2
Ke 0.16000
Then we solve for WACC
Ke 0.16000
Equity weight 0.8
Kd 0.08
Debt Weight 0.2
t 0.34
WACC 13.85600%
The company will use the data on eastern Pizza to evualuate project presented to it. Also, it will consider the new tax rate to determinate the tax shield.
Answer:
The book value of the machine at the end of year 2 is $35,000
Explanation:
Straight line method depreciates the asset on its useful life after deducting salvage value from the cost of the asset.
Depreciation per year = ( Cost of Machine - Residual Value ) / Useful life
Depreciation per year = ( $42,000 - $7,000 ) / 10 years
Depreciation per year = $3,500 per year
Book value of machine at the end of year 2 = $42,000 - ( $3,500 x 2 )
Book value of machine at the end of year 2 = $42,000 - $7,000
Book value of machine at the end of year 2 = $35,000
True because we do put other things above each other and
Answer: Floating exchange rate
Explanation: The floating exchange rate is a mechanism under which a country's exchange prices are set by the supply and demand-based foreign exchange market compared to other currencies. It compares with a fixed exchange rate, wherein the government decides the rate completely or mainly.
Floating currency regimes mean that lengthy-term currency price movements represent relative economic power and country-to-country rate of interest differences.
A currency that is too high or low may have a negative impact on the country's economy, impacting trade and debt-paying efficiency. The state or banking system would try to take action to bring their currencies towards a more desirable level.
