10x10x10x10, you have to multiply 10 by 10 four times, since it's 10 to the power of 4.
Beta= 1.3
Debt to equity ratio= 0.4
Market rate of return= 11.6%
= 11.6/100
= 0.116
Tax rate= 32%
= 32/100
= 0.32
Risk free rate= 3.3%
= 3.3/100
= 0.033
Pretax cost of debt= 7.2%
= 7.2/100
= 0.072
The firm's WACC can be calacluated as follows
RS= 0.033+1.3(0.116-0.033)
= 0.033+1.3(0.083)
= 0.033+0.1079
= 0.1409
WACC= (1/1.4)(0.1409)+(2/1.4) (0.072)(1-0.32)
= (0.7142)(0.1409) + (1.4285)(0.072)(0.68)
= 0.1006+0.0699
= 0.1705(100)
= 17.05%
Hence the firm's WACC is 17.05%
Answer:
need a diagram to be able to answer
Step-by-step explanation:
Well this is simple a calculator type problem...but if you are curious as the the algorithm used by simple calculators and such...
They use a Newtonian approximation until it surpasses the precision level of the calculator or computer program..
A newtonian approximation is an interative process that gets closer and closer to the actual answer to any mathematical problem...it is of the form:
x-(f(x)/(df/dx))
In a square root problem you wish to know:
x=√n where x is the root and n is the number
x^2=n
x^2-n=0
So f(x)=x^2-n and df/dx=2x so using the definition of the newton approximation you have:
x-((x^2-n)/(2x)) which simplifies further to:
(2x^2-x^2+n)/(2x)
(x^2+n)/(2x), where you can choose any starting value of x that you desire (though convergence to an exact (if possible) solution will be swifter the closer xi is to the actual value x)
In this case the number, n=95.54, so a decent starting value for x would be 10.
Using this initial x in (x^2+95.54)/(2x) will result in the following iterative sequence of x.
10, 9.777, 9.774457, 9.7744565, 9.7744565066299210578124802523397
The calculator result for my calc is: 9.7744565066299210578124802523381
So you see how accurate the newton method is in just a few iterations. :P
He will need to save up for 12 weeks because he is getting 2 dollars a week.
It says after 3 weeks he saved 6, so divide six by three and the answer meaning he makes 2 a week. Next divide 24 by 2 and you get 12.
