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3 years ago

Would you use Real GDP or Nominal GDP to accurately calculate growth in 2011? Explain in three to four sentences.

1 answer:

3 0

You would want to use Real GDP because it looks at the inflation and deflation due to price "changes" over the years. Nominal GDP only looks at the current market of today's economy. So with this being said you only want to use Real GDP if your looking back at the economy's history, but you would look at Nominal GDP if you wanted to know the current economy status.

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The debt has an interest rate of 8.50% (short term) and 10.50% (long term). The expected rate of return on the company's shares

viva [34]

Answer:

Re = 16.02%

Explanation:

current stock price 36 x 7,660,000 = 275,760,000

cost of equity = 17.5%

current short term debt = 141,600,000

cost of short term debt = 8.5%

current long term debt = 210,600,000

cost of long term debt = 10.5%

total financing = 627,960,000

equity = 275,760,000 / 627,960,000 = 0.4391
short term debt = 141,600,000 / 627,960,000 = 0.2255
long term debt = 210,600,000 / 627,960,000 = 0.3354

WACC = (0.4391 x 0.175) + (0.2255 x 0.085 x 0.75) + (0.3354 x 0.105 x 0.75) = 0.0768 + 0.0144 + 0.0264 = 0.1176 or 11.76%

under the new structure:

total financing = 627,960,000

equity = 325,760,000 / 627,960,000 = 0.5188
short term debt = 141,600,000 / 627,960,000 = 0.2255
long term debt = 160,600,000 / 627,960,000 = 0.2557

assuming WACC remains unchanged:

0.1176 = (0.5188 x Re) + (0.2255 x 0.085 x 0.75) + (0.2557 x 0.105 x 0.75) = (0.5188 x Re) + 0.0144 + 0.0201 = (0.5188 x Re) + 0.0345

0.5188 x Re = 0.1176 - 0.0345 = 0.0831

Re = 0.0831 / 0.5188 = 0.1602 or 16.02%

4 0

3 years ago

Frankie's Chocolate Co. reports the following information from its sales budget: Expected Sales: July $ 90,000 August 110,000 Se

Cerrena [4.2K]

Answer:

$112,500

Explanation:

July August September October

Credit Sales(90000*75%) 67,500

(110,000*75%) 82,500

(120,000*75%) 90,000

Cash Sales (120,000*25% 30,000

<em>Total Cash expected to be collected in September will be;</em>

Credit Sales of August $82,500

Cash Sales of September $30,000

Total cash expected to be collected in September =$112,500

4 0

3 years ago

Read 2 more answers

What are the advantages and disadvantages of paying the new manager primarily cash pay?

Sindrei [870]

The advantages of primarily cash pay are the following:
1. It motivates the owner to expand the business.
2. The desirable increase in the level of services.

The disadvantages are the following:
1. There was a little incentive to the owner.
2. There was potential to lose sight to the customers.

7 0

3 years ago

OSHA is an acronym that represents:

Svetach [21]

Your answer would be D.) Occupational safety and health administration

5 0

3 years ago

The Occupational Safety and Health Act (OSHA) mandated that first-aid kits be available in business establishments employing mor

Galina-37 [17]

Answer:

The correct answer is D

Explanation:

OSHA stands for Occupational Safety and Health Act, which is passed in order to encourage the safer workplace conditions in the U.S. They set the standards as well as perform the inspections at the job sites.

OSHA made mandatary the first aid kits to be available in the business who are employing more than 3 years people. So, this newly formed company was successful in developing the kits, this is example of the government regulations as a source for the ideas of the new products.

3 0

3 years ago