Answer:
Cost of common equity is 16.49%
Explanation:
The WACC of weighted average cost of capital is the cost of a firm's capital structure. The capital structure of the firm can comprise of the following components namely debt, preferred stock and common stock.
For a firm which has only debt and equity, the WACC is calculated as follows,
WACC = wD * rD * (1 - tax rate) + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- we multiply the cost of debt (rD) by (1 - tax rate) to calculate the after tax cost of debt
Plugging in the values of the available components, we can calculate the cost of common equity to be,
0.1370 = 0.3 * 0.12 * (1 - 0.4) + 0.7 * rE
0.1370 = 0.0216 + 0.7 * rE
0.1370 - 0.0216 = 0.7 * rE
0.1154 / 0.7 = rE
rE = 0.164857 or 16.4857% rounded off to 16.49%
Changes in board of director configurations over time indicate that currently boards are dominated by outsiders (with over 84 percent being outside board members). Boards are smaller (with most being smaller than 12 members) and a decrease in the percentage of female directors from 15 percent to 12 percent between 2012 and 2016.-This statement is true
Explanation:
The statement in the questions highlights the following facts:-
- 84% of the board members are outsiders.
- Also the size of the Board has been limited to 12 members.So it means that out of the 12 members 84% of the members are outsiders.
- Another fact revealed by the statement is that the percentage of female directors has also been reduced.In the year 2012 the percentage of females holding the position of the director was 15% which has been declined to 12% in the year 2016.
So the statement reflects the changes in the board of director configuration from the year 2012 to 2016.
The statement , currently boards are dominated by outsiders indicates that in the year 2016 the board of directors positions is mainly held by the outsiders.
In a situation where production capacity is maxed out (200%
plant utilization) and the company is stocking out of the product, it is not advisable
in the short run to increase the promotional budget for the product in a bid to
increase awareness.
Answer:
<em>Incomplete question is "2. What journal entry should Johnson record to recognize bad debt expense for 2021? 3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021 4. If Johnson instead used the direct write-off method, what would bad debt expense be for 2021?"</em>
1. Gross accounts Receivable = Allowance Account balance at beginning / 10%
= $30,000 / 10%
= $300,000
2. Year Account Title Debit Credit
2021 Bad debt expense $105,000
($500,000*10% + $55,000)
To Allowance for Doubtful Accounts $105,000
3. Accounts receivable written off = Beginning balance of Allowance Account - Ending Balance of Allowance account
= $30,000 - (- $50,000)
= $30,000 + $50,000
= $80,000
4. Bad debt expense for 2021 (direct write off method) = Amount written off = $80,000
Answer:
Increase in GDP = $5
correct option is b. GDP increases by $5.00
Explanation:
given data
bake bread sold = $3.00
flour sold = $1
sells to consumer = $2.00
to find out
what is the effect on GDP
solution
we get GDP that is increase is express as
Increase in GDP = flour sold + ( bake bread sold - flour sold ) + sells to consumer ..................1
put here value we get by equation 1
Increase in GDP = $1 + ( $3 - $1 ) + $2
Increase in GDP = $5
correct option is b. GDP increases by $5.00
