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Lemur [1.5K]
2 years ago
7

Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in c

apital by issuing $750,000 of debt at a before-tax cost of 9.6%, $78,000 of preferred stock at a cost of 10.7%, and $880,000 of equity at a cost of 13.5%. The firm faces a tax rate of 25%. What will be the WACC for this project?
Business
1 answer:
Soloha48 [4]2 years ago
6 0

Answer:

The WACC for this project is 10.605%

Explanation:

The WACC or the weighted average cost of capital is the weighted average return that the company is expected to pay its capital providers.The WACC is calculated by multiplying the cost of each component by their respective weights in the capital structure. The WACC is calculated using the following formula,

WACC = wD * (1-tax) * rD  +  wP * rP  +  wE * rE

Where,

  • wD, wP and wE represents the weight of debt, preferred stock and common equity respectively as a proportion of total capital.
  • rD, rP and rE is the cost of debt, preferred stock and equity respectively.
  • The (1-tax) is used in debt component to calculate the after tax cost of debt

WACC = 750000/1708000 * (1-0.25) * 0.096  +  78000/1708000 * 0.107  +  880000/1708000 * 0.135

WACC =  0.10605 or 10.605%

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A seller netted $55,000 at closing. if the seller paid costs of $1000 and an 8.5% commission, what was the sale price to the nea
Ulleksa [173]

Answer: The sale price to the nearest dollar was $61,202

We arrive at the answer as follows:

The term 'netted' refers to the seller's profits after deducting costs and commissions.

Hence we need to add back these amounts to arrive at the sale price.

                      Net Proceeds                                       $55,000

<u>Add:              Costs                                                          $1,000   </u>

                     Total                                                         $56,000  

The commission is 8.5%; however commissions are quoted as a percentage of sales price.

Expressed in other words, if the sale price was 100, commissions were 8.5. That would mean that the total above would be the equivalent of 100 - 8.5 = 91.5

From this we can arrive at the sale price as follows:

Sales Price = \frac{56000 * 100}{91.5}

Sales Price = 61,202

6 0
2 years ago
A business consultant earns a flat fee for his work as well as an hourly fee. He charges his clients at a rate of $75 per hour.
Delicious77 [7]
Well...if he earns $75 an hour....and he worked for 20 hours...that's
75 * 20 which = 1500
Now it says he also earns a flat fee....since the question states he billed the client 1800...and he only earned 1500 of it...that must mean that his flat fee would be
1800 - 1500 = 300
So his flat fee is 300...and his variable charge...is 75x (75 dollars per hour)
in an equation...this would look like
C(x) = 75x + 300
4 0
2 years ago
Beyond redesigning the nature of the work itself, and involving employees in decisions, approach to making the work environment
RideAnS [48]

Answer:

flextime

Explanation:

Flextime is method of schedule management employed in the organization. It can be also termed as flexible hours schedule. Under this schedule management policy, employees have freedom to decide their starting and ending time of their work hours, given against the tradition 9AM to 5PM work schedule. But condition here remains that numbers of work hours for the day should not change.

Such a schedule is designed to help employees balance their professional and personal schedule allocation. It has been found to be  helpful in reducing stress for employees.

One Example of this could be:  

Employee can divide their eight hours work day into two parts

One in morning from 6AM to 10 AM and other from 3PM to 7PM.

Since the the question is asking about answers to which helps employees to have control on their time, Flextime is most suitable answer to this question.

7 0
2 years ago
Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $118,660. The seller
natulia [17]

Answer:

$117,417

Explanation:

Calculation to Determine the amount to be capitalized in the asset account

Costs that are to be capitalized:

List price $118,660

Less: Discount ($5,043)

($118,660*4.25%)

Freight cost $2,640

Specialist fee $1,160

Total costs $117,417

Therefore the amount to be capitalized in the asset account will be $117,417

7 0
2 years ago
Neil and Zack are working on a project that requires both research and presentation. Neil is better at research, so he gives the
natima [27]

The question provides us with the following scenario: "Neil and Zack are working on a project that requires both research and presentation. Neil is better at research, so he gives the presentation to Zack. " A comparative advantage is when an agent is better at something or can produce something at a lower cost. Here, Neil can do research better, so the answer is: A.) Neil doing the research



3 0
2 years ago
Read 2 more answers
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