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ziro4ka [17]
2 years ago
7

The Upper Tier has a current debt-equity ratio of .52 and a target debt-equity ratio of .45. The cost of floating equity is 9.5

percent and the flotation cost of debt is 6.6 percent. What should the firm use as their weighted average flotation cost?
Business
1 answer:
Zielflug [23.3K]2 years ago
6 0

Answer: 8.60%

Explanation:

Given the following :

Current debt-equity ratio = 0.52

Target debt-equity ratio = 0.45

Cost of floating equity = 9.5%

Floatation cost of debt = 6.6%

The Weighted average cost is calculated by finding the Weighted average cost of both debt and equity.

1 + 0.45 = 1.45

Weight of debt= 0.45/ 1.45 =0.31034

Weight * cost of debt

0.31034 × 6.6% = 2.0482758

Weight of equity = 1/1.45 = 0.6896551

Weight * cost of equity

0.6896551 × 9.5% = 6.5517241

Sum of both

(6.55 + 2.05) % = 8.60%

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Answer:

c. triple-bottom-line approach

Explanation:

The triple-bottom-line approach is a framework with 3 parts: financial, social, and environment. Performance evaluation is more than just financial, it also incorporates social and environmental impacts of the business.

Volcanic batterie's vision statement has represented these 3 bottom lines

Financial- VolcanicBatteries will conscientiously track its financial performance to ensure profits for its investors

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6 0
2 years ago
A company manufactured 1,000 units of product during the year and sold 800 units. Costs incurred during the current year are as
Llana [10]

Answer:

$2,400

Explanation:

Total production Cost:

= Direct materials and direct labor + Indirect materials and indirect labor + Insurance on manufacturing equipment

= $7,000 + $2,000 + $3000

= $12,000

Amount should be reported as inventory in the company’s year-end balance sheet:

= (Total production Cost ÷ Units manufactured) × (Units manufactured - Units sold)

= ($12,000 ÷ 1,000) × (1,000 - 800)

= $12 × 200

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5 0
2 years ago
An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are impor
Irina18 [472]

Answer:

$800 million

Explanation:

GDP = consumption (C) + investment (I) + government spending (G) + Net Export (NX)

Y = C + I + G + NX

The number of computers left is

= 1,000,000 - 200,000 (household) - 300,000 (businesses) - 300,000 (government) - 100,000 (Foreign)

= 100,000

This worth 100,000 × $2,000 = 200 million

                  300,000 computers × $2,000 = 600 million

Total of these two = 200 + 600 million

                              = 800 million

Therefore, the value of the investment component of GDP is $800 million.

7 0
2 years ago
You are conducting a discounted cash flow analysis (DCF). You purchased an asset for $400,000 at time point zero. The asset was
andrew11 [14]

Answer: $112000

Explanation:

First, we calculate the book value in year 7 which will be:

= Depreciation × Balance life

= $400,000 × 3/10

= $120,000

Then, the cash flow as a result of the transaction will be:

= Asset sale - (Asset - Book value) × Tax rate

= 110000 - [(110000 - 120000) × 20%]

= 110000 - (-2000)

= 110000 + 2000

= 112000

6 0
1 year ago
The rhythm of the poem is _____. slow and steady throughout fast and erratic throughout steady at first, then more erratic errat
Vinvika [58]

steady at first then more erratic

8 0
2 years ago
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