Arvrage cost is the total cost divided by the number of units.
Answer:
10.12%
Explanation:
Wacc = (D / V)rd (1 - t) + (E / V) re
(D/V) = 0.3
Rd = before tax cost of debt = 5.5%
T = tax rate = 30%
(E / V) = 0.7
Re = marginal cost of equity = 12.8%
= (0.3 x 5.5% × 0.7) + (0.7 x 12.8%) = 1.155% + 8.96% = 10.12%
I hope my answer helps you
Answer:
c. reserves increase by $100 million and the money supply increases by more than $100 million
Explanation:
Based on the information given in a situation where a FRACTIONAL-RESERVE BANKING SYSTEM has no availability of EXCESS RESERVES and no CURRENCY HOLDINGS, which means that if the central bank buys BONDS that worth $100 million, the RESERVES will tend to INCREASE by the amount of $100 million while the MONEY SUPPLY on the other hand will INCREASES by more than $100 million.
a.
WACC is calculated as –
WACC = (Weight of common stock X Cost of common stock) + (Weight of preferred stock X Cost of preferred stock) + (Weight of debt X After tax cost of debt)
WACC = (64% X 13.4%) + (9% X 6.4%) + (27% X ((1- 40%)*8.1%))
WACC = 10.46%
b. After tax cost of debt is calculated as –
After tax cost of debt = (1- tax rate) X cost of debt pre-tax
After tax cost of debt = ((1- 40%)*8.1%))
After tax cost of debt = 4.86%
Answer:
Yes, because they lead people to make poor decisions.
Explanation: