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Klose Outfitters Inc. believes that its optimal capital structure consists of 60 percent common equity and 40 percent debt, and

Eduardwww [97]

Answer:

WACC 10.38305%

Explanation:

First we solve for the source of financing:

Expansion: 5,900,000

60% Equity: 3,540,000

Retained Earnins 2,000,000

then 1,540,000 will be common equity

40% debt: 2,360,000 It can raise up to 3,000,000 so it will be sufficient

D 2,360

E 1,540

RE 2000

V 5,900

Now we can solve for Weighted average cost of capital

$WACC = K_e(\frac{E}{E+RE+D}) + K_{re}(\frac{P}{E+RE+D}) + K_d(1-t)(\frac{D}{E+RE+D})$

Ke 0.15

Equity weight 0.261016949 (1,540,000 / 5,900,000)

Kre 0.12

RE Weight 0,338983 (2,000,000 / 5,900,000)

Kd 0.1

Debt Weight 0.4 ( 2,360,000 / 5,900,000)

t 0.4

$WACC = 0.15(0.261016949152542) + 0.12(0.338983050847458) + 0.1(1-0.4)(0.4)$

WACC 10.38305%

5 0

2 years ago

If supply for a product is high but demand is low, what most likely needs to happen to achieve equilibrium?

vodka [1.7K]

If supply for a product is high but demand is low, the one that most likely needs to happen to achieve equilibrium is: B. The price of the product must go down. High supply of product will create an abundance in the market. By lowering the price of the product, it will attract more consumers for that product (icnreasing its demand) and will eventually lower the product abundance and bring the curve into equilibrium

7 0

3 years ago

Read 2 more answers

Click this link to view O*NET's Work Activities section for Architects. Note that common activities are listed toward the

Oxana [17]

Answer:

communicating with persons outside of the organization

drafting, laying out, and specifying technical devices, parts, and equipment

making decisions and solving problems

thinking creatively

4 0

2 years ago

Read 2 more answers

If ending accounts receivable exceeds the beginning accounts receivable Group of answer choices cash collections during the peri

sukhopar [10]

Answer:

no cash was collected during the period

or

cash collections during the year are less than the amount of revenue recognized

Explanation:

For example if we had Accounts receivable beginning balance $ 250,000 and Sales of $ 500,000 are made on accounts then the Total Accounts receivable will be $ 750,000.

But out of the $ 500,000 sales only $300,00 cash is collected and the remaining $ 200,000 is still in the Accounts receivable balance so the ending Accounts receivable balance will be $ 250,000 + $200,000 = $ 450,000 which will be greater than beginning Accounts receivable balance.

So there are two possibilities either cash collections during the year are less than the amount of revenue recognized.

or

no cash was collected during the period.

Similarly it cannot be choice no 1 : collections during the period exceed the amount of revenue recognized

Because if more cash is collected then ending account receivable balance would be less than the beginning account receivable balance.

Choice no 3 is also wrong if cash collections are more than the ending accounts receivable balance would be less

4 0

2 years ago

Research shows that ____ is the number one reason cited for why organizations invest in information technology projects.

timofeeve [1]

Answer:

D

Explanation:

3 0

2 years ago