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3 years ago

Horford Co. has no debt. Its cost of capital is 8.9 percent. Suppose the company

Business

1 answer:

blsea [12.9K]3 years ago

4 0

Answer:

A. 12.1%

B. 8.9%

Explanation:

a. Calculation for What is the company's new cost of equity

Using this formula

New cost of equity=Cost of capital+[(Cost of capital- Debt interest rate ) *(Debt-equity ratio)*(1)]

Let plug in the formula

New cost of equity=[0.089+[(0.089-0.057)*(1)*1]

New cost of equity=[0.089+0.032*(1)*1]

New cost of equity=[0.121*(1)*1]

New cost of equity=0.121*100

New cost of equity=12.1%

Therefore the company's new cost of equity will be 12.1%

b. Calculation for What is its new WACC

Particular Weight Cost Weighted cost

Equity 0.5000 *12.1% = 0.0605

Debt 0.5000 * 5.7% =0.0285

WACC =0.089*100

WACC =8.9%

(0.0605+0.0285)

Therefore the new WACC will be 8.9%

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Answer:

7.68%

Explanation:

Data provided in the question

Present value = $1,891

Future value or Face value = $2,000

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The formula is shown below:

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So, after solving this, The pretax cost of debt is 7.68% (3.84% × 2)

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3 years ago

Your supermarket is trying to determine how many meatloaf dinners should be produced on Monday. The Monday demand for meatloaf d

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Answer:

The recommended production quantity is that which maximizes profit.

<em>Quantity 130</em>

<em />

Explanation:

Quantity to produce is the problem here. Remember that this is one of the fundamental questions in the discipline of Economics.

- What to produce? - For whom to produce?

- How to produce? - In what quantity?

Possible Production Quantities:

100, 110, 120, and 130

Mean Demand = 100

Standard Deviation = 20

Lowest possible demand = 100 - 20 = 80units

Highest possible demand = 100 + 20 = 120units

<u>* Solve, using the mean demand for each quantity level. Assume also that on every Monday, the minimum possible quantity is what is purchased. That's the safest assumption anyway.</u>

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FOR QUANTITY 100,

Revenue = 7×100 = $700 Direct cost = 2×100 = $200

Indirect cost = 0.6×20 = $12 Total cost = 200 + 12 = $212

PROFIT = 700 - 212 = $488

FOR QUANTITY 110,

Revenue = 7×110 = $770 Direct cost = 2×110 = $220

Indirect cost = 0.6×30 = $18 Total cost = 220 + 18 = $238

PROFIT = 770 - 238 = $532

FOR QUANTITY 120,

Revenue = 7×120 = $840 Direct cost = 2×120 = $240

Indirect cost = 0.6×40 = $24 Total cost = $264

PROFIT = 840 - 264 = $576

FOR QUANTITY 130,

Revenue = 7×130 = $910 Direct cost = 2×130 = $260

Indirect cost = 0.6×50 = $30 Total cost = $290

PROFIT = 910 - 290 = $620

<em>Remember, the base assumption is that only the minimum quantity of 80units is bought each Monday. This is the only way to account for wastage; which costs 0.6 dollar per unit. So, the more the quantity produced, the greater the likelihood of wastage.</em>

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3 years ago

When employers use diplomas and degrees to determine who is eligible for jobs, even through the diploma or degree may be relevan

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When employers use diplomas and degrees to determine who is eligible for jobs, even though the diploma or degree may be relevant to the actual work, it becomes a Credential Society.

<h3>What is a diploma?</h3>

A diploma is a record given by a school attesting that the holder has graduated after completing their academic programs.
Historically, it has also been used to refer to a diplomatic charter or formal document.
A testamur, which is Latin for "we testify" or "certify," may also be used to refer to the diploma this term is frequently used in Australia to refer to the document certifying the award of a degree.
Alternatively, this document may be referred to as parchment, a degree certificate, or a certificate of graduation.

<h3>What are degrees?</h3>

A qualification given to students upon successful completion of a course of study in higher education, typically at a college or university, is known as an academic degree.
These institutions frequently provide a variety of degrees, typically including bachelor's, master's, and doctoral degrees, frequently in addition to other academic certificates and professional degrees.
The bachelor's degree is the most popular undergraduate degree, while in some nations there are lower level higher education credentials that are also labeled degrees.

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2 years ago

has a standard of 2 direct labor hours per unit. The standard wage rate of each worker is $32.50 per hour. In July, the company

ikadub [295]

Answer:

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Explanation:

Given the above information,

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Standard rate = $32.50

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= ( Standard hours allowed for production - Actual hours taken) × Standard rate per direct labor hour

= [(2 × 4,770) - 8,940] × $32.50

= [9,540 - 8,940] × $32.50

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<h3>International trade raises the standard of living in all trading countries. </h3>

Explanation:

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3 years ago