Answer: 9.81%
Explanation:
Cost of capital = (cost of debt * weight of debt) + ( cost of equity * weight of equity)
Cost of Equity = Risk free rate + beta * Market risk premium
= 8% + 0.59 * 6%
= 11.54%
Cost of capital = (8% * 49%) + (11.54% * 51%)
= 9.81%
This statement is true. The amount the shareholder has paid
for the stock he owns is the amount of potential loss he can incur as a result
of being an owner in a corporation. The creditor of the company cannot run to
the personal properties of each shareholder. This condition makes the
corporation differ from partnership.
Answer:
$10,000
Explanation:
Net Credit Sales $250,000
Allowance for Doubtful Accounts $250,000*4%=$10,000
Bad Debt Expense will be $10,000
Bad Debt Expense Dr.$10,000
Allowance for Uncollectible Cr.$10,000
Answer:
$3,642.50
Explanation:
For computing the average annual amount of net income (loss), first we have to compute the net income which is shown below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
$9,700 = $0 + Net income - ($2,420 + $0 + $1,440 + $1,010)
$9,700 = $0 + Net income - $4,870
So, the net income is
= $9,700 + $4,870
= $14,570
Now the average annual amount of net income is
= 
= 
= $3,642.50
Answer:
WACC= 9.8%
Explanation:
<em>The weighted Average cost of Capital is the average cost of capital for the different sources of long-term capital available to a firm weighted according to the proportion each source of finance bears to the total capital in the pool. </em>
After-tax cost of debt = (1- tax rate) × before tax cost of debt
= (1-0.3)× 8% = 5.6%
Total Equity = 20,000× 2= 40,000.
Bank loan = 20,000
Total value fund = 40,000 + 20,000 = 60,000
WACC= 5.5%× (2/6) + 12%× (4/6) = 9.8%
WACC= 9.8%
