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JulsSmile [24]
3 years ago
6

Suppose your company needs $43 million to build a new assembly line. Your target debt-equity ratio is .65. The flotation cost fo

r new equity is 6 percent and the flotation cost for debt is 2 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What do you think about the rationale behind borrowing the entire amount?
Business
1 answer:
elena-14-01-66 [18.8K]3 years ago
6 0

Answer: See explanation

Explanation:

Debt = 0.65

Weight = 39.39%

Cost for debt = 2%

Product = 39.39% × 2%

= 0.3939 × 0.02

= 0.007878

Equity = 1.00

Weight = 60.61%

Cost for equity = 6%

Product = 60.61% × 6%

= 0.6061 × 0.06

= 0.036366

Weighted average floatation cost:

= 0.007878 + 0.036366

= 0.044244

= 4.42%

The true cost of the building will then be:

= Funds needed / (1 - Floatation cost)

= $43,000,000 / (1 - 0.044244)

= $43,000,000 / 0.955756

= $44,990,562

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Answer:

$4,520

Explanation:

Calculation for the cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes

First step is to calculate the Predetermine overhead rate using this formula

Predetermined overhead rate based on capacity = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base

Let plug in the formula

Predetermined overhead rate based on capacity=$ 30,510÷270 hours

Predetermined overhead rate based on capacity=$113 per hour

Now let calculate the Cost of unused capacity using this formula

Cost of unused capacity =( Estimated total amount of the allocation base − Actual amount of the allocation base) × Predetermined overhead rate

Let plug in the formula

Cost of unused capacity= (270 hours − 230 hours) *$113 per hour

Cost of unused capacity=40 hours* $113 per hour

Cost of unused capacity=$4,520

Therefore the cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes will be $4,520

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3 years ago
Emily has been waiting for a promotion to a management position for almost five years, when she notices that men fill most of th
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Answer:

Glass ceiling.

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The glass ceiling effect is the protection from the endeavors of ladies and minorities to achieve the best positions in real organizations.

Within the same concepts of the other terms surrounding the workplace, there are similar terms for restrictions and barriers concerning women and their roles within organizations and how they coincide with their maternal duties.

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Answer:

D

Explanation:

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Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footn
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Answer:

The correct answer is Option B.

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