Answer:
the capital structure weight of debt is 0.3467
Explanation:
The computation of the capital structure weight of debt is as follows:
Total firm value be
= 17,900 shares × $71 + $270,000 × 102.5% + $370,000 × 107.5%
= $1,270,900 + $276,750 + $397,750
= $1,945,400
Now the weight of debt is
= ($276,750 + $397,750) ÷ ($1,945,400)
= 0.3467
Hence, the capital structure weight of debt is 0.3467
Answer:
$100,000
Explanation:
The common stock account would increase by the total value of the stated value of the shares issued and the difference between the issue price and stated value would increase the capital in excess of the par account
Increase in common stock account=10,000*$10
Increase in common stock account=$100,000
increase in paid-in capital in excess of par=($70-$10)*10,000
increase in paid-in capital in excess of par=$60*10,000
increase in paid-in capital in excess of par=$600,000
Answer:
9.09%
9.327%
Explanation:
For computing the weighted cost of capital first we have to determine the cost of preferred stock, cost of common stock and the after cost of debt is shown below:
The Cost of preferred stock is
= Preferred dividend ÷ market price of preferred stock
= $2.50 ÷ $25
= 10%
The cost of common stock is
= (Expected dividend ÷ market price) + growth rate
= ($1.50 ÷ $20) + 0.05
= 12.50%
And, the after cost of debt is
= Before cost of debt × (1 - tax rate)
= 0.08 × (1 - 0.35)
= 5.2%
Now the WACC is
= Weightage of debt × cost of debt + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
= (0.45 × 5.2%) + (0.05 × 10%) + (0.50 × 12.5%)
= 2.34 + 0.5 + 6.25
= 9.09%
In the second case, the WACC is
= Weightage of debt × cost of debt + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
= (0.30 × 5.2%) + (0.05 × 10%) + (0.65 × 12.5%)
= 0.702 + 0.5 + 8.125
= 9.327%
Answer: There will be an effect as there might be labor shortage.
Explanation: Minimum wage is the least renumeration pay that can legally be paid by employers to their workers. It is a price floor method below which employees can't sell their labor. When a minimum wage is imposed by the government, firms are not allowed to pay less than the wage rate mandated by the government.
If the minimum wage is set below the equilibrium wage rate, quantity of labor reduces in comparison to the quantity demanded by employers. If the least paid person is paid $16 per hour and the government imposes a minimum wage of $10, There will be a shortage of labor because most people won't like to work as a result of the lower income. It also leads to lack of motivation among workers.
Answer:
17.30%
Explanation:
The computation of the return on investment is shown below
But before that the net income is
Sales $5,375,000
Less: COGS -$3,225,000
Less: Operating Expenses -$1,147,000
Net Income $1,003,000
Now
Return on Investment is
= Net Income × 100 ÷ Average Assets
= $1,003,000 × 100 ÷ $5,800,000
= 17.30%
