The answer is <span><em>the same amount; different reservation prices</em></span>
Answer:
WACC is 12.8%
Explanation:
<em>The weighted average cost of capital (WAAC) is the average cost of all the various sources of long-term finance used by a business weighted according to the proportion which each source of finance bears to the the entire pool of fund.
</em>
To calculate the weighted average cost of capital, follow the steps below:
Step 1: Calculate cost of individual source of finance(this is already given)
Cost of Equity= 15%
After-tax cost of debt = (1- T) × before-tax cost of debt =12%
Step 2 : calculate the proportion or weight of the individual source of finance
. (This already given)
Equity = 25%
Debt= 75%
Step 3; Work out weighted average cost of capital (WACC)
WACC = ( 15%× 25%) + ( 12%× 75%)
= 12.75%
WACC is 12.8%
Answer: See explanation
Explanation:
The tabular analysis of the transactions had been prepared and attached. The tabular analysis consist of heading such as cash, account receivable, supplies, equipment, account payable, common stock, revenue, expense and dividends.
Check the attachment for the solution.
Answer:
Three reason why GM build cars in China:
China has lower labor costs. This is the main reason, a Chinese worker earns a lot less than an American worker, and this results in a substantial cost reduction for GM.
China has important economies of scale. The United States also has important economies of scale, but China may have the edge in some economic sectors.
Finally, the third reason is that China has very good infrastructure like trains, roads, and ports, and this facilitates the logistics for GM.
If the president wants GM to move production back in the US, GM could demand better infrastructure (labor costs cannot be lowered, and the economies of scale are already there), and perhaps other complementary incentives like corporate tax reductions, or even subsidies.
