Answer:
Option (B) 10.87%
Explanation:
Data provided in the question:
common stock outstanding = 30,000
Market price = $15.00
Issuing price of share = $31 per share
Total face value = $280,000
Selling price = 86% of par
Cost of equity, ke = 13%
After-tax cost of debt, kd = 6.9%
Beta = 1.48
Tax rate = 30%
Now,
Market value of debt, Md = Total face value × Selling price
= $280,000 × 86%
= $240,800
Market value of equity, Me = Stocks outstanding × Market price
= 30,000 × $15
= 450,000
Thus,
WACC = [ Kd × Md + Ke × Me ] ÷ ( Md + Me )
= [ 0.069 × $240,800 + 0.13 × $450,000 ] ÷ ( $240,800 + $450,000 )
= $75,115.20 ÷ $690,800
= 0.1087
or
= 0.1087 × 100%
= 10.87%
Option (B) 10.87%
Answer:
19.05%
Explanation:
the approximate yield to maturity (YTM) formula is:
approximate YTM = {C + [(FV - PV) / n]} / [(FV + PV) / 2]
- C = coupon payment = $130
- FV = face value or value at maturity = $1,000
- PV = present value or current market value = $690
- n = 10 years
approximate YTM = {$130 + [($1,000 - $690) / 10]} / [($1,000 + $690) / 2] = ($130 + $31) / $845 = $161 / $845 = 0.1905 or 19.05%
Answer:
$20,226
Explanation:
expected sales = 11,400 - 12,000 - 12,600
expected sales price = $7.20 - $7.50 - $7.80
expected variable cost = $3.072 - $3.20 - $3.328
total fixed costs = $31,000
if you use an excel spreadsheet you can calculate all the different possible simulations and combine all the expected sales x 3 different price levels x 3 different variable costs and 1 fixed cost. Once you get all the 27 possible solutions, you just get the average.
I attached it because there is no room here.
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Answer:
Georgeland has an absolute but not a comparative advantage in producing clothing.
Explanation:
Absolute advantage is defined as the ability of a firm to produce higher amounts of a product as a result of use of the same resources with other competitors. It is usually bad a result of more efficient production process.
Comparative advantage is the ability of a firm to produce goods at a lower opportunity cost. Therefore they are able to sell at lower price compared to competitors.
Georgeland can produce 18 units of clothe per year while Alland can produce 16 units per year, so Georgeland has absolute advantage.
In producing clothes Georgeland has opportunity cost of 36 units of food which is higher than that of Alland which is 32 units of food. So Georgeland does not have comparative advantage in producing clothes.
