Answer: d. a deduction of $80,000 under financing activities.
Explanation:
Under the indirect method of showing cashflows, there are 3 sections being the Operating section, the investing section and the financing section.
The relevant section is the financing section. Financing activities are those transactions that relate to the business raising capital to fund their operations. They do this through long term debt and equity.
Dividends is a payment to shareholders and so falls under equity so by extension falls under the financing section. As dividends reduce the amount of money the company has, it is also a deduction.
<span>The government must control the money payment.</span>
Answer:
Weight of debt = 0.2453 or 24.53%
Weight of preferred stock = 0.0486 or 4.86%
Weight of common equity = 0.7061 or 70.61%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure of a company can consist of one or more of the following components namely debt, preferred stock and common stock.
To calculate the WACC, we use the market value of each component.
- The market value of debt is$101 million.
- The market value of common equity is 290.7 million
- The value of preferred stock is $20 million
Market value of common equity = 51 * 5.7 = 290.7 million
The weights to assigned to each components are,
Total weight of all components = 101 + 20 + 290.7 = 411.7 million
Weight of debt = 101 / 411.7 => 0.2453 or 24.53%
Weight of preferred stock = 20 / 411.7 => 0.0486 or 4.86%
Weight of common equity = 290.7 / 411.7 => 0.7061 or 70.61%
Answer: From the given options, the following statement is <em>false: </em><u><em>When evaluating a capital budgeting decision, we generally include interest expense.</em></u>
<em>It is a process that organization set about to measure possible projects or investments. Under this we generally do not include interest expense.</em>
<u><em></em></u>
<u><em>Therefore , the correct option here is (a) </em></u>i.e. When evaluating a capital budgeting decision, we generally include interest expense.