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Licemer1 [7]
3 years ago
5

Filter Corp. maintains a debt-equity ratio of .45. The cost of equity is 14.7 percent, the pretax cost of debt is 8.1 percent, a

nd the marginal tax rate is 34 percent. What is the weighted average cost of capital?
Business
1 answer:
trapecia [35]3 years ago
7 0

Answer:

11.78%

Explanation:

Weighted average cost of capital WACC determines firms cost of capital. It includes all sources of finance which are included in firms capital structure. The WACC is calculated with given formula:  

WACC = E/V Re + D/V * Rd (1 - T)

Re = cost of equity

V = Firms Market value of Debt and Equity

Rd = Cost of debt

E = market value of equity

D = market value of debt

T = Marginal Tax rate

WACC = 14.7 * 1 / 1.45 + 8.1 * 0.45 / 1.45 (1 - .34)

WACC = .1013 + 0.0165

WACC = 11.78%

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6 0
2 years ago
Which of the following describes the effect of the business cycle on the inflation rate and the unemployment rate? A. The unempl
Pani-rosa [81]

Answer:

The correct answer are option D for both questions.

Explanation:

Recessions is characterized with decrease in consumer and investment spending. During recessions there is a decline in inflation rate and the unemployment rate increases.

While during expansion, there is a boost in economy. So, with increase in investment and production, the unemployment rate falls. There is a rise in inflation rate as well.

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7 0
3 years ago
Read 2 more answers
Richard, age 50, is employed as an actuary. For calendar year 2019, he had AGI of $130,000 and paid the following medical expens
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Answer:

c. $10,340

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5 0
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