Quick ratio = 1.30 (Option C)
<u>Explanation:</u>
Quick ratio or acid test ratio is calculated as follows:
(Cash plus marketable securities plus accounts receivable ) divide by total current liabilities
In our question, we have been given with the data:
Cash = 45 million
Marketable securities = 33 million, accounts receivable = 66 million, total current laibailities = 111 million
So, let us now put the given values in the above stated formula:
Quick ratio = ( 45 plus 33 plus 66) divide by 111
After calculating we get, 1.30
Therefore, the quick ratio is 1.30
Answer:
13%
Explanation:
the new cost of equity = old cost of equity + [(debt / equity) x (old cost of equity - cost of debt)]
the new cost of equity = 12%+ [(20 / 80) x (12% - 8%)] = 12% + 1% = 13%
Since we are in the MM world, taxes do not exist, therefore they are not included in the equation.
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