Answer:
a.
WACC = 0.07961 or 7.961% rounded off to 7.96%
b.
After tax cost of debt = 0.0474 or 4.74%
Explanation:
a.
The weighted average cost of capital or WACC is the cost of a firm's capital structure. To calculate the WACC, we multiply the weight of each component of the capital structure by the cost of that component. The components of capital structure can be one or all of the following namely debt, preferred stock and common stock.
The formula for WACC is,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- D, P and E represents debt, preferred stock and common stock respectively
WACC = 0.15 * 0.06 * (1 - 0.21) + 0.1 * 0.05 + 0.75 * 0.09
WACC = 0.07961 or 7.961% rounded off to 7.96%
b.
The after tax cost of debt is calculated by multiplying the cost of debt by (1 - tax rate) to adjust for the tax advantage provided by debt as interest payments on debt are tax deductible.
After tax cost of debt = 0.06 * (1 - 0.21)
After tax cost of debt = 0.0474 or 4.74%
Answer:
Explanation:
Which of the following was a demand of the marchers
jobs for women
segregated schools
an end to bias
second-class citizenshipWhich of the following was a demand of the marchers?
Answer:
The correct answer is b. Adjusting revenues to only include organic revenue growth.
Explanation:
One of the quantitative planning techniques is the projection of financial statements or also called pro forma statements.
The applications that can be had among others are the following:
Know how the year will end for tax purposes in terms of income and deductions in order to make decisions before the end of the year.
Another application will be to know the external financing needs for the period you want to know.
The most common and practical method of projecting financial statements is based on sales.
Answer:
the degree of operating leverage is 5
Explanation:
The computation of the degree of operating leverage is given below:
= Contribution margin ÷ EBIT
= (Sales - Variable expense) ÷ (Sales - Variable expense - Fixed expense)
= ($670,000 - $420,000) ÷ ($670,000 - $420,000 - $200,000)
= $250,000 ÷ $50,000
= 5
Hence, the degree of operating leverage is 5
Answer:
Option C, “inversely related” is the correct answer.
Explanation:
Option “C” is the correct answer because if the interest rate on the bonds falls then its demand rises. Thus, its rising demand will derive up the price of bonds. If the interest rate rises then the demand for bonds will fall and this will reduce the price of bonds. Therefore, this condition shows the inverse relationship between the interest rate and bond price
