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2 years ago

Horford Co. has no debt. Its cost of capital is 8.9 percent. Suppose the company

Business

1 answer:

blsea [12.9K]2 years ago

4 0

Answer:

A. 12.1%

B. 8.9%

Explanation:

a. Calculation for What is the company's new cost of equity

Using this formula

New cost of equity=Cost of capital+[(Cost of capital- Debt interest rate ) *(Debt-equity ratio)*(1)]

Let plug in the formula

New cost of equity=[0.089+[(0.089-0.057)*(1)*1]

New cost of equity=[0.089+0.032*(1)*1]

New cost of equity=[0.121*(1)*1]

New cost of equity=0.121*100

New cost of equity=12.1%

Therefore the company's new cost of equity will be 12.1%

b. Calculation for What is its new WACC

Particular Weight Cost Weighted cost

Equity 0.5000 *12.1% = 0.0605

Debt 0.5000 * 5.7% =0.0285

WACC =0.089*100

WACC =8.9%

(0.0605+0.0285)

Therefore the new WACC will be 8.9%

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Therefore, based on this fact, Vivian should consider "Price elasticity of demand." Price elasticity of demand can be defined as a measurement used in economics to show the responsiveness or elasticity of the quantity demanded of a good or service to a change in its price when nothing but the price changes.

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2 years ago

Which of the following statements is true regarding a work team?A) Work teams are rarely used in organizations today.B) Work tea

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Answer:

C) Work teams generate positive synergy through coordinated effort.

Explanation:

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Therefore, correct statement is:

Statement C

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2 years ago

Pioneer Chicken advertises "lite" chicken with 30% fewer calories than standard chicken. When the process for "lite" chicken bre

zubka84 [21]

Answer:

$LL = 420 -3\frac{25}{\sqrt{25}}= 405$ represent the lower limit

$UL = 420 +3\frac{25}{\sqrt{25}}= 435$ represent the Upper limit

So then the limits for this case are (405, 435)

Explanation:

Let's define X as our random variable that represent the "number of calories for a chicken breast", and we have the following data:

$\bar X = 420 , \sigma= 25$

The select a sample of 25 chickens , n = 25. And we want to find the limits for a confidence interval within 3 deviations from the mean with z =3.

We assume that the distribution for X is normal. So then the distribution for the sample mean is also normal.

And for this case the confidence interval would be given by:

$(\bar X -z\frac{\sigma}{\sqrt{n}} < \mu < \bar X -z\frac{\sigma}{\sqrt{n}})$

So the limits are defined as:

$LL = \bar X -z\frac{\sigma}{\sqrt{n}}$ represent the lower limit

$UL = \bar X +z\frac{\sigma}{\sqrt{n}}$ represent the Upper limit

Since we have all the values given we cn replace like this:

$LL = 420 -3\frac{25}{\sqrt{25}}= 405$ represent the lower limit

$UL = 420 +3\frac{25}{\sqrt{25}}= 435$ represent the Upper limit

So then the limits for this case are (405, 435)

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2 years ago

Cameron has a small graphics design business that specializes in customizing social websites. The business is growing; however,

Veronika [31]

Answer: Introducing mass production methods into his business.

Explanation:

As the given information suggests that Cameron has a small graphic design business. He is responsible for customizing social websites which is a creative and time consuming task. This also require a lot of thinking and innovation skills. At the verge of expanding his business he should avoid mass production as this will likely to reduce his quality of production and limit his creativity.

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2 years ago

Mason Farms purchased a building for $689,000 and made repairs costing $136,000. The annual taxes on the property are $8,200. Th

ZanzabumX [31]

Answer:

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Explanation:

In the given question, the building was purchased and it repairs also. Plus, annual taxes are applicable to the property. The current market value and the book value of the building is also given in the question

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2 years ago