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aniked [119]
3 years ago
11

If a firm has a cost of equity of 15 percent, and the firm is 100 percent equity financed. The firm is contemplating a $150 mill

ion expansion of its existing operations, funded by selling new stock. Flotation costs will run 10 percent of the amount issued. When flotation costs are considered, what is the cost of expansion?
a. $135 million
b. $150 million
c. $166.67 million
d. $175 million
e. $185.67 million
Business
1 answer:
Nikolay [14]3 years ago
4 0

Answer:

c. $166.67 million

Explanation:

cost of expansion = new equity issued / (1 - flotation costs)

cost of expansion = $150 million / (1 - 10%) = $150 million / 90% = $166.67 million

Flotation costs increase the cost of equity, since they are an expense that decreases the net amount of money received by a corporation when it issued new stocks or new bonds.

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3 years ago
Practice Makes Perfect Inc. was started on July 1 of the current year. Practice Makes Perfect provides piano lessons for student
Natalka [10]

Answer:

I used an excel spreadsheet to record this transactions on an accounting equation.  

Practice Makes Perfect, Inc.

Income Statement

For the month ended July 31, 202x

Revenues                                               $2,000

Expenses:

  • Advertising expense $500
  • Rent expense $1,000
  • Wages expense $1,000
  • Supplies expense $300
  • Depreciation expense $750
  • Interest expense $417                 <u> ($3,967)</u>

Net income                                             ($1,967)

Practice Makes Perfect, Inc.

Balance Sheet

For the month ended July 31, 202x

Assets:

  • Cash $99,783
  • Accounts receivables $1,800
  • Supplies $1,700
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Total assets                                         $150,533

Liabilities:

  • Accounts payable $2,500
  • Notes payable $50,000

Total liabilities                                      $52,500

Stockholders' equity

  • Common stock $100,000
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Total stockholders' equity                  $98,033

Total liabilities + equity                      $150,533        

Download pdf
6 0
3 years ago
What are two examples of management information systems?
Anettt [7]

Answer:

process control systems, human resource management systems, sales and marketing systems, inventory control systems, office automation systems, enterprise resource planning systems, accounting and finance systems and management reporting systems.

Explanation:

8 0
3 years ago
Who among the following is a member of a utilitarian organization: a) Angela, who works as a lawyer at a prestigious law firm an
dimaraw [331]

Of the options given, the most likely member of a utilitarian organization is<u> a. </u><u>Angela</u><u>, who works as a </u><u>lawyer </u><u>at a </u><u>prestigious law firm </u><u>and </u><u>earns $60,000 annually.</u>

A utilitarian organization is one where:

  • Employees receive some sort of compensation for their work
  • Employees are usually contracted to a company to provide a certain service

Angela is receiving a compensation of $60,000 annually and is a lawyer which means that they are probably contracted to the law firm.

We can therefore conclude that Angela is working for a utilitarian organization based on the fact that there is compensation and contract.

<em>Find out more at brainly.com/question/13956837. </em>

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3 years ago
The Eating Club, a five-star restaurant, advertises a job in the local newspaper as "Waiters needed. Experience required. Must l
boyakko [2]

Answer:

Ella can sue The Eating Club since their advertisement contains language that could indicate a preference based on sex, which is a violation of the Equal Employment Opportunity Act. The law prohibits employment discrimination based on gender, race, color, age, sexual orientation, religion, national origin, disability, political beliefs, and marital or familial status.

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