I believe the answer would be the mechanical solution.
Yes you do cause you already used the coupon or promo code
Answer: Statement A
Explanation: Direct cost are those costs which are variable in nature and can be allocated to the total units of output produced, these are easily traceable. Examples - direct material, direct labor and piece rate wages etc.
Indirect costs are those cost which cannot be allocated to the number of units produced on individual basis unlike direct cost these costs can be either fixed or variable in nature. Examples - rent expenses, administrative expenses.
.
From the above explanation we can conclude that statement A is correct.
Answer:
a)
Cost of debt (after tax) = 5.4%
Cost of preferred stock (
) = 10.53%
Cost of common stock (
) = 16.18%
b)
WACC = 14%
c)
project 1 and project 2
Explanation:
Given that:
Debt rate (
) = 9% = 0.09
Tax rate (T) = 40% = 0.4
Dividend per share (
) = $6
Price per share (
) = $57
Common stock price (
)= $39
Expected dividend (
) = $4.75
Growth rate (g) = 4% = 0.04
The target capital structure consists of 75% common stock (
), 15% debt (
), and 10% preferred stock (
)
a)
Cost of debt (after tax) =`
Cost of debt (after tax) = 5.4%
Cost of preferred stock () = 
= 10.53%
= 10.53%
Cost of common stock () = 
= 16.18%
b)
WACC = 14%
c) Only projects with expected returns that exceed WACC will be accepted. Therefore only project 1 and project 2 would be accepted
Answer:
The correct answer is D. Is the return investors require on the total assets of the firm.
Explanation:
The Weighted Average Capital Cost (WACC) is a financial measure, which has the purpose of encompassing in a single figure expressed in percentage terms, the cost of the different sources of financing that a company will use to fund a specific project.
To calculate the WACC, it is necessary to know the amounts, interest rates and tax effects of each of the selected sources of financing, so it is worth taking the time to analyze different combinations of these sources and take the one that provides the lower figure
.
Comparatively, without going into the detail of the project evaluation, "the WACC must be less than the profitability of the project to be funded" or expressed in another order, "the project performance must be greater than the WACC."
