Answer:
$116,161.616
Explanation:
Given that,
Total interest paid = $230,000
Time period = 30 year
Annual interest rate = 6.6%
Total interest on loan = Loan amount × Interest rate × Time period
$230,000 = Loan amount × 6.6% × 30 years
Loan amount:
= $116,161.616
Therefore, the loan amount is $116,161.616.
Answer:
As the WACC is more than 7.5%, option D is the correct answer.
Explanation:
The weighted average cost of capital or WACC is the cost of a firm's capital structure. To calculate the WACC, we multiply the weight of each component of the capital structure by the cost of that component. The components of capital structure can be one or all of the following namely debt, preferred stock and common stock.
The formula for WACC is,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- D, P and E represents debt, preferred stock and common stock respectively
First we need to determine the cost of debt and equity for this firm.
We use the market value of debt and thus, rate for the calculation of WACC.
The cost of debt will be its yield to maturity as it is the current rate or cost. Thus, rD will be 6%.
The cost of equity can be determined using the constant growth model of DDM 's formula for prcie today.
P0 = D0 * (1+g) / (r - g)
80 = 5 * (1+0.05) / (r - 0.05)
80 * (r - 0.05) = 5.25
80r - 4 = 5.25
80r = 5.25 + 4
r = 9.25 / 80
r = 0.115625 or 11.5625%
WACC = 0.5 * 0.06 * (1-0.3) + 0.5 * 0.115625
WACC = 0.0788125 or 7.88125%
As the WACC is more than 7.5%, option D is the correct answer.
<u>Answer:</u>
a. The price of comparable Florida orange juice decreases.
a-a This would shift left and affect demand.
b. One hundred new fruit juice processing plants open in California.
b-a This would shift Right and affect demand
c. The price of a bottle increases significantly due to new government anti-shatter regulations.
c-a This would shift left and affect Demand
d. Researchers discover a new fruit juice processing technology that reduces production costs.
d-a This would shift right and affect demand
e. The average age of consumers increases, and younger people drink less orange juice
e-a This would shift left and affect demand
<u>Explanation:</u>
A state of market where market supply is equal to market demand thus understood as "market equilibrium". The price of equilibrium is the price of a good or service, if its supply is equal to the market demand for it.
A reduction in demand will trigger the price of the equilibrium to fall; the amount delivered will decrease. An increase in supply, unmodified for all other things, will provoke the price of equilibrium to fall; the amount requested will increase. While declining supply will cause the price of the equilibrium to rise; the demanded quantity will decrease.
<span>To find earnings per share, simply divide the company's net income by the number of shares that are outstanding. In this case, the values are $280,000/80,000. This gives a value of $3.50 for the earnings per share outstanding. Dividends, in this case, are not necessary for the calculation.</span>
Answer:
a) $0.27, so tennis balls were cheaper in 1975.
Explanation:
This is a question that has to do with the time value of money & includes accounting for inflation.
Let's list out the given parameters us:
Nominal price (1975) = $0.10, CPI (1975) = 52.3, Nominal price (2005) = $1.00, CPI (2005) = 191.3
We want to know how much the tennis ball cost in 1975 dollars, hence, we make 1975 our base year. The calculation follows below:
Real price (2005) = Nominal price (2005) * CPI (1975) ÷ CPI (2005)
Real price (2005) = 1.00 * 52.3 ÷ 191.3
Real price (2005) = $0.2734
Real price (2005) = $0.27
The calculation reveals to us that a 2005 tennis ball cost $0.27 (in 1975 dollars). Which means that a tennis ball in 2005 is more costly than it did in 1975.
Hence, option A is the correct answer
