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Leno4ka [110]
2 years ago
15

Mountain Groves has an unlevered cost of capital of 13.2 percent, a cost of debt of 8.3 percent, and a tax rate of 21 percent. W

hat is the target debt-equity ratio if the targeted cost of equity is 14.5 percent?
Business
1 answer:
laiz [17]2 years ago
7 0

Answer: D/E ≥ 0.3358

Explanation:

Given that,

Unlevered cost of capital = 13.2 %

Cost of debt = 8.3 %

Tax rate = 21 %

Targeted cost of equity = 14.5 %

D/E = target debt-equity ratio

Targeted cost of equity ≥ Unlevered cost of capital + (Unlevered cost of capital - Cost of debt) × D/E × (1 - Tax rate)

                             14.5% ≥ 13.2% + (13.2% - 8.3%) × D/E × (1 - 21%)

                             0.013 ≥ 0.03871 × D/E

                                D/E ≥ 0.3358

Therefore, the target debt-equity ratio is D/E ≥ 0.3358.

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Japan has the ability to produce either 10,000 televisions or 5,000 cars in a day. The United States has the ability to produce
lisabon 2012 [21]

Answer:

<h2>The United States has the comparative advantage in car production.</h2>

Explanation:

  • Japan has a lower opportunity cost of producing televisions compared to cars, implying that Japan basically has to give up or sacrifice or trade off relatively less number of cars to produce one more television compared to the production of one more car.
  • Alternatively, US has a lower opportunity cost of producing cars relative to televisions meaning that US has to give up, sacrifice or trade off less number of televisions to manufacture one more car in comparison to the production of one more television.
  • Hence, in this case,US has a comparative advantage in the production of cars and Japan has a comparative advantage in production of television and both countries can produce these respective commodities by using relatively less productive resources or factor inputs.
8 0
2 years ago
Cala Manufacturing purchases land for $390,000 as part of its plans to build a new plant. The company pays $33,500 to tear down
Svetlanka [38]

Answer:

Explanation:

The journal entry is shown below:

Land A/c Dr $470,500

Land Improvement A/c Dr $87,800

Building A/c Dr $1,452,200

 To Cash A/c                               $2,010,500

(Being these costs are recorded)

The computation of the land is shown below:

= Purchase cost of new plant + tear down cost + fill and level the lot cost

= $390,000 + $33,500 + $47,000

= $470,500

7 0
2 years ago
TLC Credit, Inc. has $35.0 million in consumer loans with an average interest rate of 12.0%. The bank also has $30.0 million in
MissTica

Answer:

$460,000 decrease

Explanation:

The computation of TLC's estimated change in revenues next year is shown below:-

TLC's estimated change in revenues next year = ((Consumer loan × Interest rate) + (Home equity loan × Interest rate) + (Corporate securities × Interest rate)) - ((Increased consumer loan × Decrease rate) + (Increase equity loan × Interest rate) + (Corporate securities × (1 - decreased percentage) × average interest rate))

= (($35.0 million × 0.12) + ($30.0 million × 0.O8) + ($5.0 million × 0.06)) - (($40.0 million × 0.10) +($32.0 million × 0.065) + (5 million × (1 - 20%)  × 0.09))

=$6,900,000 - $6,440,000

= $460,000 decrease

Therefore for computing the TLC's estimated change in revenues next year we simply applied the above formula.

6 0
2 years ago
At December​ 31, ​, Corporation has cash of ​million, accounts receivable of ​million, and​ long-term assets of million. The com
saveliy_v [14]

Answer:

Balance Sheet December 31

Assets

Cash                              $1,000,000

Accounts Receivable   $1,000,000

Long-term assets         $1,000,000

Total Assets                 $3,000,000

Liabilities

Accounts Payable        $1,000,000

Long-term note            $1,000,000

Total Liabilities             $2,000,000

Stockholder's Equity

Common Stock             $1,000,000

Retained Earnings        $1,000,000

Total Stockholder's Equity $2,000,000

6 0
2 years ago
The following balances appear on the books of Sarah Simmons Enterprises: Retained Earnings, $29,600; Dividends, $10,500; Income
irina1246 [14]

Answer:

A. T Account balance $19,100

B. $31,600

C.$31,600

Explanation:

Sarah Simmons Enterprises

A.

T-account account

Dr Cr

Dr C/o 10500 Cr Beginning balance 29,600

Cr C/o 10500

Cr Balance 19,100

b.

Simmons enterprise retained earnings ending balance will be:

Retained earnings 29,100

Less Dividends 10,500

Balance 19,100

Add (10,500+2,000) 12,500

Balance 31,600

C. Ending balance of Simmons, Capital will be 31,600 just as in ( b) where the retained earnings ending was 31,600

5 0
2 years ago
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