Answer:
Business relationship
Explanation:
My teacher just gave me the answer
Answer: $4000U
Explanation:
From the information given in the question, the variable overhead efficiency variance is the difference between the actual allocation base times the standard variable rate and the applied variable overhead. This will be:
= $64000 - $60000
= $4000U
Therefore, the variable overhead efficiency variance is $4000U
Answer:
7.1%
Explanation:
Money multiplier measures the total increase in money multiplier
Money multiplier =1 / reserve requirement
1 / 14% = 7,1%
Answer:
$2,116
Explanation:
The computation is shown below:
Option 1 - Leasing
= 3510 + ( 3510 ÷ 1.2 ) + ( 3510 ÷ 1.2 ^ 2 )
= 8872.5
Now
Option 2 - Buying
Given that
Initial Cost - 5185
PV of salvage value = 1330 ÷ 1.2 ^ 3
= 769.68
So,
Cost = 5185 - 769.68
= 4457.176
Now the payment should be
= 4457.176 × 0.47473 (PV annuity factory for 20% at 3 years)
= $2,115.955
= $2,116
Answer:
a.cost of common equity is 14.40%
b.WACC is 10.62%
c.Midwest Electric Company should accept project A since it has a rate of return higher than WACC of 10.62%
Explanation:
The cost of common equity can be ascertained using the stock price formula and changing the subject of the formula to r(cost of common equity)
Stock price=Do*(1+g)/(r-g)
stock price is $20
g is the dividend growth rate at 4%
Do is the dividend just paid $2
20=2*(1+4%)/(r-4%)
20=2.08/r-4%
20(r-4%)=2.08
r-4%=2.08/20
r=(2.08/20)+4%
r=14.40%
WACC=Ke*E/V+Kd*D/V*(1-t)
Ke is the cost of equity of 14.40%
E is the 55% or 0.55
D is 45% or 0.45
V=E+D=045+0.55=1
Kd is the cost of debt which is 10%
t is the tax rate at 40% or 0.40
WACC=14.40%*0.55/1+10%*0.45/1*(1-0.4)
WACC=(14.40%*0.55/1)+(10%*0.45/1*0.6)
WACC=10.62%
Midwest Electric Company should accept project A since it has a rate of return higher than WACC of 10.62%