Answer:
The WACC is 8.66%
Explanation:
The WACC or weighted average cost of capital is the cost to firm of its capital structure which can have 3 components namely debt, preferred stock and common stock. We take the weighted average of these components and their respective costs to calculate WACC. Furthermore, we take the after tax cost of debt for WACC calculation and that is why we multiply the cost of debt by (1-tax rate).
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
WACC = 0.33 * 0.065 * (1-0.28) + 0.08 * 0.06 + 0.59 * 0.1125
WACC = 0.086619 or 8.86619% rounded off to 8.66%
Answer:
D. 3.66%
Explanation:
For computing the after tax cost of debt we need to apply the RATE formula i.e to be shown in the attachment
Given that,
Present value = $2,120
Future value or Face value = $2,000
PMT = $2,000 × 6.6% ÷ 2 = $66.60
NPER = 18 years × 2 = 36 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 3.05% × 2 % = 6.10%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 6.10% × ( 1 - 0.40)
= 3.66%
Answer:
.4
Inelastic
Explanation:
Elasticity of Demand = |%Change in Demand / %Change in Price|
%Change in Demand= |(40,000 - 50,000)/50,000| = 20%
%Change in Price = |(60 - 40)/40| = 50%
Elasticity of Demand = .2/.5 = .4 or 40%
.4 < 1 so Demand is Inelastic
Answer:
The correct answer is (C)
Explanation:
Generally the common stocks worth per share is normally a limited quantity, for example, $0.05 or $0.01 and it has no association with the market estimation of the price of stock. The standard worth is once in a while referred to as the regular stocks. The par value has no connection with the price of the stock.
Answer: $1,000
Explanation:
Given Data;
Total government demand is Q = 800 -10P
marginal cost (Mc) = $50
contracted price (cp) = $70 per unit
Therefore;
Marginal Revenue ( MR ) = Marginal Cost ( MC)
Q = 800 -10P
800 - Q = 10P
Divide through by 10, where Q = 1
800/10 - 1/10 = P
80 - 0.1Q = P
Total Revenue(TR) = PQ
TR = 80 - 0.1Q
MR = MC
where MC = $50
80 - 0.1Q = 50
Collecting like terms
80 - 50 = 0.1Q
30 = 0.1 Q
Divide both side by 0.1
Q = 300
Price would be
P = 80 - 0.1Q
P = 80 - 0.1(300)
P = $50
MC = 40
Producing Q units
Total Cost (TC ) = 40 * ( 300 )
= $12,000
Total profit
= TR - TC
= ( P * Q ) - $12,000
= ( $50 * 300 ) - $12,000
= $15,000 - $12,000
= $3,000
Changes caused by regulations
Contracted price = $70
Quantity = 100Units
TT’ = ( P * Q ) - TC
= ( 70 * 100 ) - ( 50 * 100 )
= $7,000 - $5,000
= $2,000
TT - TT’ = $ ( 3000 - 2000 )
= $1,000
If legislation is passed all profit would reduce by $1,000
