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Stolb23 [73]
2 years ago
5

Turnbull Co. is considering a project that requires an initial investment of $270,000. The firm will raise the $270,000 in capit

al by issuing $100,000 of debt at a before-tax cost of 11.1%, $30,000 of preferred stock at a cost of 12.2%, and $140,000 of equity at a cost of 14.7%. The firm faces a tax rate of 40%. What will be the WACC for this project
Business
1 answer:
svp [43]2 years ago
6 0

Answer:

WACC = 11.45 %

Explanation:

Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund

WACC = (Wd×Kd) + (We×Ke) + (Wp × Kp)

After-tax cost of debt = Before tax cost of debt× (1-tax rate)

Kd-After-tax cost of debt = 11.1%(1-0.4) =6.66%

Ke-Cost of equity = 14.7%

Kp= Cost of preferred stock = 12.2%

Wd-Weight of debt =100/270=0.370

We-Weight of equity = 140/270=0.518

Wp= weight of preferred stock = 30/270=0.111

WACC = (0.518× 14.7%) + (0.370 × 6.7%) + (0.111×12.2) =  11.447%

WACC = 11.45 %

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Other things equal, an increase in productivity will Multiple Choice reduce aggregate supply and increase real output. reduce bo
leva [86]

Answer:

increase both aggregate supply and real output.

Explanation:

A rise in productivity makes it possible for each and every firm to rise the greater amount of output. due to this  aggregate supply will rise which will lead to increase in the real output.

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Therefore the above represent the answer  

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The demand curve facing a monopolistic competitive firm will be __________ than the demand curve facing a perfectly competitive
Bad White [126]

Answer:

Downward sloping; more elastic

Explanation:

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A monopolistic competitive firm can either raise price and lose few customers or reduce price and gain some more customers.

A monopolistic competitive firm

has a more ELASTIC demand.

Elasticity of demand is the degree of responsiveness of demand to a change in price, income and price of other commodities.

Perfectly Competitive market have the following characteristics;

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4 0
3 years ago
Sunland Corporation has retained earnings of $708,900 on January 1, 2020. Net income during 2020 was $1,663,000, and cash divide
andriy [413]

Answer:

Beginning RE                    708,900

prior period adjustment  <u>    89,470  </u>

adjusted beginning RE     798,370‬

net income                       1,663,000

cash dividends            <u>        (77,800)      </u>

ending RE                         2,383,570‬

Explanation:

The amend of the mistake is done to adjust the beginning retained earnings as it didn't occur in the current accounting cycle.

We have to added as it was posted as an expense something it wasnt Thus, our expense were overstated making a lower net income

then, we proceed normally by adding the net income and decreasing the cash dividends paid to arrive to ending RE

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