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2 years ago

Feldspar Inc. is considering the capital structure for a new division. Management has been given the following cost information:

Business

1 answer:

34kurt2 years ago

8 0

Answer:

Option 4

Explanation:

In this question ,we have to compute the WACC which is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)

For Option 1, it would be

= (0.3 × 10%) × ( 1 - 40%) + (0.7 × 12.5%)

= 1.8% + 8.75%

= 10.55%

For Option 2, it would be

= (0.4 × 10.5%) × ( 1 - 40%) + (0.6 × 13%)

= 2.52% + 7.8%

= 10.32%

For Option 3, it would be

= (0.5 × 11%) × ( 1 - 40%) + (0.5 × 13.5%)

= 3.3% + 6.75%

= 10.05%

For Option 4, it would be

= (0.6 × 11.7%) × ( 1 - 40%) + (0.4 × 14.2%)

= 4.212% + 5.68%

= 9.89%

For Option 5, it would be

= (0.7 × 13%) × ( 1 - 40%) + (0.3 × 15.5%)

= 5.46% + 4.65%

= 10.11%

So based on this, the management should accept option 4 as it derives the best debt asset ratio

The weightage of equity would be come

= 1 - weightage of debt

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TechPro offers instructional courses in e-commerce website design. The company holds classes in a building that it owns.

myrzilka [38]

Answer:

1. fixed and indirect

2. variable and direct

3. variable and direct

4. fixed and indirect

5. fixed and indirect

6. variable and direct

Explanation:

<u>Fixed and variable costs</u>

A fixed cost is expected to be constant for a short term period whilst a variable cost is expected to vary in direct proportion to the number of units produced in this case it is the individual classes.

Depreciation expense on classroom building and on computers is a fixed cost that is expected to remain constant and the instructor wage varies with the number of classes thus a variable cost.

<u>Direct and Indirect costs</u>

A direct cost can be directly traced to the cost object by observation whist the indirect cost can not be directly traced on a cost object.

The instructors wage is a direct cost, his effort is seen with the success of the classes whist the depreciation expenses are indirect costs.

4 0

2 years ago

_____ is a personal application software that includes a wide range of built-in functions for statistical, financial, logical, d

Pie

Spreadsheets are personal application software that includes a wide range of built-in functions for statistical, financial, logical, database, graphics, and date and time calculations. It is an application or program that is designed for analysis, organization and storing of data in a table form. It functions on data that are entered in the cells of a table where the cells can contain numeric or text values. In this program, you can input equations and relate cells in order to do automatic calculation. It helps in processing a large number of data since you can easily copy and execute functions and equations.

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1 year ago

Lakesha does not have enough in her bank account to use a debit card for the purchase of a bike she needs to get to work. She ha

Bezzdna [24]

Answer:

]-0]-]'-0]

Explanation:

7 0

1 year ago

The Wei Corporation expects next year’s net income to be $15 million. The firm is currently financed with 40% debt. Wei has $12

Sophie [7]

Answer:

52%

Explanation:

Before diving into the use of residual distribution model, first, let us specify what our Total Investment required, Equity, Next year net income is:

Total Investment Required = 12,000,000

Equity = 12,000,000 × (1 - 40%) = 7,200,000

Next Year Net income = 15,000,000

Using the residual distribution model , we can specify that,

Retention Amount of Net income = Equity required = 7,200,000

and,

Dividend Distribution = Net income - Retention Amount of Net income

==> Dividend Distribution = 15,000,000 - 7,200,000

==> Dividend Distribution = 7,800,000

Therefore,

Payout ratio = Dividend Distribution ÷ Net income

==> Payout ratio = 7800000 ÷ 15000000 = 0.52

Therefore, the Payout ratio for next year will be 52%

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2 years ago

Proton Corp. is an automobile manufacturer known for producing efficient, durable, and low-priced cars. Recently, the company la

deff fn [24]

Answer: Option (A)

Explanation:

Product Line stretching is referred to as an expanding technique undertaken by the organization under which the new commodities and services are released in the similar product line but further the ongoing product dimension with some of the different or additional features. The product line stretching at times can also tend to be down market or up market.

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2 years ago