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soldi70 [24.7K]
3 years ago
8

When the pizzeria makes 100 pizzas per day, it earns an economic ______ of ______?

Business
1 answer:
Alex17521 [72]3 years ago
5 0
<span>When the pizzeria makes 100 pizzas per day, it earns an economic incentive of 10% of sales from corporate. This is be cause corporate knows general advertising can only do so much. Local franchises need to take up some of the slack, post their own signs, and do some the legwork to get people in the door. If they can get at least 100 pizzas sold per day it's an obvious sign to corporate thay they must be putting in the extra effort. Extra effort means more money for corporate so they provide extra incentive to motivate the masses :)</span>
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You are given the following information for Cleen Power Co. Assume the company’s tax rate is 40 percent. Debt: 5,000 6.6 percent
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Answer:

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Explanation:

Face value= $ 1000    (assume)

Current price = 1000* 109% = 1090

semianual interest =1000 *.066*6/12 = 33

semiannual months = 20 *2 = 40

Yield to maturity of bonds = [semiannual interest +(face value -current price) /months]/[(face value+price)/2]

                                            = [33 + (1000- 1090 )/40 ]/[(1000 +1090)/2]

                                            = [33 + (-90/40) ] / [2090 /2]

                                           = [33 - 2.25 ] /1045

                                          = 30.75 /1045

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After tax cost of debt = 5.88 (1- .40 ) = 3.528 %

Market value of bond = 1090 *5000 = $ 5450000

b)cost of equity =Rf +[beta*market premium ]

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                            = 4.6 + 5.6

                            = 10.20 %

market value of equity = 380000*56 =$ 21280000

Total market value of debt and equity =5450000 +21280000

                                                                  = $ 26730000

weight of debt = 5450000/26730000 = .2039

weight of equity = 21280000 /26730000 = .7961

WACC = (after tax cost of debt *WD)+(cost of equity *We)

            = (3.528 * .2039 )+(10.20 * .7961)

              = .7194 + 8.1202

              = 8.84%

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