Answer:
Billie Bob
Depreciation deduction during the second year is:
$192.
Explanation:
a) Data and Calculations:
Property basis value = $2,400
Useful life = 5 years
Depreciable rate per year = $2,400/5 = $480
Depreciation deduction during the second year = $480 * 40% = $192
b) The depreciation deduction for year 2 is limited to the 40% business use. This implies that Billie Bob cannot claim the 100% depreciation of $480 for the property since he could only use it 40% for his business.
The following is a TRUE statement about inventory within a continuous review system: A. When holding costs increase, Economic Order Quantity decreases B. When service level decreases, Economic Order Quantity decreases C. When demand increases, Economic Order Quantity decreases D. When ordering or setup costs increase, Economic Order Quantity decreases E. When holding costs decrease, Economic Order Quantity decreases
Answer:
A. When holding costs increase, Economic Order Quantity decreases
Explanation:
The answer will be attain through the following illustration
Suppose, Demand = 1000 units, Ordering cost = $10, Holding cost = $0.50
Economic Order Quantity = √2 * 1000 Units * $10 / $0.50
Economic Order Quantity = √40000
Economic Order Quantity= 200 units
Assume, there is increase of holding cost to $1.50
Economic Order Quantity = √2 * 1000 Units * $10 / $1.50
Economic Order Quantity = √13333
Economic Order Quantity = 116 unit
Therefore, when holding costs increase, Economic Order Quantity decreases.
Inventory is termed as the stock of the goods and services available for the consumption of the consumers or the customers. It is referred as the management of the goods and services as per the demand of the customers in the market.
The true statement about inventory within a continuous review system is A. When holding costs increase, Economic Order Quantity decreases.
This can be illustrated with the specific example as below:
Let, Demand = 1000 units, Ordering cost = $10, Holding cost = $0.50
Economic Order Quantity = [tex]\sqrt{2} \times 1000 \:Units \times\frac{\$10 }{\$0.50}[/tex]
Economic Order Quantity = √40000
Economic Order Quantity= 200 units
Assume that there has been an increase in holding cost to $1.50
Economic Order Quantity = [tex]\sqrt[]{2} \times 1000 \:Units \times\frac{ \$10}{ \$1.50}[/tex]
Economic Order Quantity = √13333
Economic Order Quantity = 116 units
Therefore, when holding costs increase, Economic Order Quantity decreases.
To know more about the inventory within a continuous review system, refer to the link below:
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Which factor would credit card companies most likely use to determine an
applicant's creditworthiness?
A. Hourly wages
B. Languages spoken
C. Political party
D. Size of family
A factor that credit card companies would most likely use to determine an applicant's creditworthiness is Hourly wages.
Credit card issue
When you apply for a credit card, you’re required to share an array of personal information on your application. This will include details like your name, address, Social Security number and current employment status. You’ll also be asked to list your income on your application, although the type of income card issuers ask for can vary depending on the card issuer.
Determination of hourly wages
Not all credit card issuers will ask for your annual net income. Some may explicitly ask for your gross income. If you are paid an hourly wage, on the other hand, you may need to figure out your gross income using last year’s tax return or by multiplying your gross weekly income by the number of weeks you work within a year.
Thus, A factor that credit card companies would most likely use to determine an applicant's creditworthiness is Hourly wages.
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HELP ME ASAP!!!
Select the correct answer.
What does the term sustainability refer to in construction?
A.
a building that does not depend on traditional energy sources to power its internal systems
B.
a building that uses only non-renewable energy sources
a building that is environmentally responsible and resource-efficient throughout its life cycle
C.
D.
a building that can withstand the pressure of external forces such as strong winds
Answer:
a building that is environmentally responsible and resource-efficient throughout its life cycle
Sraibn271 Corporation has two divisions: Domestic Division and Foreign Division. Last month, the corporation reported a contribution margin of $46,400 for Domestic Division. Foreign Division had a contribution margin ratio of 35% and its sales were $243,000. Net operating income for the Sraibn271 Corporation was $36,800 and traceable fixed expenses were $51,000.
(ID#19361)
What were Sraibn271 Corporation's common fixed expenses?
a) $131,450
b) $43,650
c) $51,000
d) $94,650
Answer: b) $43,650
Explanation:
Contribution margin of Domestic division + contribution margin of Foreign division - traceable fixed cost - common fixed cost = Net operating income for company
46,400 + (0.35 * 243,000) - 51,000 - Common = 36,800
80,450 - Common = 36,800
Common = 80,450 - 36,800
= $43,650
What is the fundamental economic problem?
..........................
Germany is capital abundant country and Japan is labor abundant country. If computers are produced mostly by capital and beer is produced mostly by labor, the H-O model predicts that Question 22 options: Japan will export computers in exchange for beer. Germany will export computers in exchange for beer. Germany is too small to be of economic interest to Japan. Computers and beer don't mix, so trade cannot increase either country's well-being.
Answer:
If computers are produced mostly by capital and beer is produced mostly by labor, the H-O model predicts that
Germany will export computers in exchange for beer.
Explanation:
The H-O model or Heckscher-Ohlin theory is an economic model about the comparative advantages of nations in international trade. The model tries to explain the equilibrium of trade existing between two countries that have varying specialties and natural resources. According to the H-O model, countries export more goods and services for which they have plenty resources than they do for goods and services for which they have scarce resources. For example, if a country has capital in abundance, it will export more of capital-intensive products while it will import labor-intensive products, because it has scarce labor resources.
Which case below best represents a case of price discrimination? A. A professional baseball team pays two players with different batting averages different salaries. B. A major airline sells tickets to senior citizens at lower prices than to other passengers. C. An insurance company offers discounts to safe drivers. D. A utility company charges less for electricity used during "off-peak" hours, when it does not have to operate its less-efficient generating plants.
Answer:
B. A major airline sells tickets to senior citizens at lower prices than to other passengers.
Explanation:
The pricing strategy refers to a strategy where the company charges the different prices for the similar products to the customers
In the case of the pure price discrimination, the seller would charge the price i.e. maximum he or she would have to pay also it is depend upon the specific characteristics and the amount charged to each and every group through a different price
Therefore the option B is correct
QS 23-11 Selection of sales mix LO P3 Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,700 production hours available. Contribution margin is $6 for product X and $5 for product Y. 1. Calculate contribution margin per production hour. 2. What is the most profitable sales mix for this Company
Answer:
Contribution margin per production hour
Product X = $12
Product Y = $15
Explanation:
Part 1
Contribution margin per production hour
Contribution margin per production hour = Contribution ÷ Time to produce one product
Therefore,
Product X = $6 ÷ 0.5
= $12
Product Y = $5 ÷ 0.33
= $15
Part 2
The Demand Units of Product X and Product Y are missing so the calculation of profitable sales mix is impossible.
This mix would have been calculated by :
Manufacturing all the units of Product Y since Y has the highest contribution margin per production hour (demand for Y × hours required per unit)With the remainder of hours out of 4,700 after producing all of Product Y demand, we would then produce Product X.
Chang, an Non Resident Alien, is employed by Fisher, Inc., a foreign corporation. In November, Chang spends 10 days in the US performing consulting services for Fisher’s U.S. branch. She earns $5,000 per month. A month includes 20 workdays. How much is her U.S.-sourced income, is it exempt or non-exempt, and why?
Answer and Explanation:
The computation of the amount considered as US sourced income is as follows;
= $5,000 × 10 days ÷ 20 days
= $2,500
The following are the requirement related to the fully exempt US source income is as follows:
1. The service should be perfomed by an United States NRA for 90 days or less
2. The compensation should not be more than $3,000
3. The service should be performed on behalf of
a. NRA, foreign corporation or partnership who not engaged in US trade
b. The office should be maintained in US by an individual who should be the citizen of US
So the same is not allowed for exemption
why does this app suck i a way? i looked at this question: The managers want to know how many boxes of 12 cookies can be filled with the 3,258 cookies that have been baked. Fatima starts by subtracting the largest number of boxes she can easily calculate. She knows that 100 boxes of 12 cookies can be put into one crate. How many crates can be filled from the total of 3,258 cookies?
then an expert verified its 3 so i put it in and it said incorrect. am i not getting something or is it maybe incorrect in my platform?
Answer:
this app is fine, it has helped me a lot
Explanation:
BUT, you shouldnt rely on it all the time, unless you're genuinely struggling on grasping a topic I suggest trying to teach to yourself.
Brad's Diner is expanding and expects operating cash flows of $32,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $3,000 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 12 percent
Answer: $57,101.73
Explanation:
First find the present value of the cash inflows. The $32,000 is a constant payment so is an annuity. The net working capital will be realized at the end of the project as well.
Present value of cash inflows = (32,000 * Present value interest factor of an annuity, 4 years, 12%) + 3,000/ (1 + 12%)⁴
= (32,000 * 3.0373) + 1,906.55
= $99,101.73
NPV = Present value of inflows - Outflows
= 99,100.15 - (39,000 + 3,000)
= $57,101.73
Analysts look for red flags in financial statements that may signal financial trouble. Which of the following is a red flag that suggests that a company may be in trouble? A. a consistent movement in sales, merchandise inventory, and accounts receivable B. operating activities are a major source of cash flows C. a significant decrease in net income for several years in a row D. a reduction in the debt ratio
Answer:
C. a significant decrease in net income for several years in a row
Explanation:
A significant decrease in net income for several years in a row show that the firm is generating less revenue or its expenses are generally increasing at a rate greater than the sales. This may soon lead into a loss. A loss making firm will eventually have challenges in cashflow. So, this signals financial trouble.
A company has $110,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $1,000 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
Answer:
Provision on accounts receivable = $110,000 * 4% = $4,400
Total allowance for doubtful accounts = $4,400 - $1,000 = $3,400
Date Account Titles and Explanation Debit Credit
Bad debt expense $3,400
Allowance for doubtful accounts $3,400
(To record the bad debt expense)
The following information was available from the inventory records of Sheffield Corp. for January: Units Unit Cost Total Cost Balance at January 1 9200 $9.73 $89516 Purchases: January 6 6400 10.31 65984 January 26 7900 10.71 84609 Sales January 7 (7700 ) January 31 (11300 ) Balance at January 31 4500 Assuming that Sheffield does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar
Answer:
$45,990
Explanation:
The Weighted Average Cost Method, calculates a new Unit Cost with every purchase that is made. This is applicable to perpetual Inventory method. In this case we are required to use the periodic Inventory method (Sheffield does not maintain perpetual inventory records). Thus our Unit Cost is calculated from Inventory available for Sale.
Step 1
Units Available For Sales Calculation :
Opening Balance 9,200
Add Purchases (6,400 + 7,900) 14,300
Units Available for Sale 23,500
Less Units Sold (7700 + 11300) (19,000)
Ending Inventory Units 4,500
Step 2
Unit Cost = Total Cost ÷ Units Available for Sale
= ($89,516 + $65,984 + $84,609) ÷ 23,500
= $10.22
Step 3
Ending Inventory = Units in Stock × Unit Cost
= 4,500 × $10.22
= $45,990
On January 1, Vermont Corporation had 48,400 shares of $9 par value common stock issued and outstanding. All 48,400 shares had been issued in a prior period at $22 per share. On February 1, Vermont purchased 910 shares of treasury stock for $24 per share and later sold the treasury shares for $18 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1 would include a
Answer:
Debit to Treasury Stock for $21,840
Explanation:
Cost = Number of Stock * Cost per Stock
Cost = 910 shares * $24
Cost = $21,840
Date Accounts Debit Credit
Feb 1 Treasury Stock $21,840
Cash $21,840
Note: When company reacquire its outstanding shares and not retire, it is called treasury stock.
The following note transactions occurred during the year for Towell Company: Nov. 25 Towell issued a 90-day, 10% note payable for $80,000 to Hyatt Company for merchandise. Dec. 7 Towell signed a 120-day, 9% note at the bank for $120,000. Dec. 22 Towell gave Barr, Inc., a 60-day, 9%, $120,000 note for payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.
Answer:
Towell Company
Journal Entries:
Debit Interest Expense $1,790
Credit Interest Payable $1,790
To record the interest expense for the year.
Explanation:
a) Data and Calculations:
i) Nov. 25: Issue of 90-day, 10% Note Payable = $80,000
Interest on the note for the year = $80,000 * 10% * 36/360 = $800
ii) Dec. 7: Issue of 120-day, 9% Note Payable = $120,000
Interest on the note for the year = $120,000 * 9% * 24/360 = $720
iii) Dec. 22: Issue of 60-day, 9% Note Payable = $120,000
Interest on the note for the year = $120,000 * 9% * 9/360 = $270
Total interest payable for the year = $1,790
Drag the tiles to the correct boxes to complete the pairs.
Determine the management style that corresponds with each term.
Lila has complete faith in her team. She believes in
empowering them to make decisions.
Jacob prefers to make all decisions himself. He does
not like it when his employees question his decisions
Hannah makes a final decision after listen to
and considering her employees' suggestions
bureaucratic
laissez-faire
11
autocratic
Answer:
Lila: laissez-faire Jacob: autocratic Hannah: bureaucratic
Explanation:
Lila lets her team do their part and does not intervene.
Jacob wants complete control and would rather make all decisions, giving his employees no say.
Hannah considers all employee decisions, but makes the final choice.
A payroll tax is collected by which of the following methods?
A.
It is automatically deducted as a percentage of the paycheck.
B.
The paycheck is brought to the bank for the tax to be deducted.
C.
The payroll tax is paid with the income tax on April 15 of each year.
D.
The government deducts a percentage of your paycheck directly from your personal bank account.
Please select the best answer from the choices provided
A
B
C
D
Answer:
A.
It is automatically deducted as a percentage of the paycheck.
Explanation:
just did it on the exam
ABC Company issues $425,000 of bonds on January 1, 2021 that pay interest semiannually on June 30 and December 31. A portion of the bond amortization schedule appears below:
Cash Interest Change in Carrying
Date Paid Expense Carrying Value Value
01/01/2021 $599,391
06/30/2021 $14,875 $11,988 $-2,887 596,504
12/31/20211 4,875 11,930 -2,945 593,559
What is the original issue price of the bonds?
a. $592,557
b. $440,000
c. $590,534
d. $459,800
Answer:
$599,391
Explanation:
Based on the information given we were told that the bonds amount of $425,000 which is the Face Value of Bonds were issued by the company on January 1, 2021 which means that ORIGINAL ISSUE PRICE of the bonds will be the Carrying Value or the Issues Value of Bonds of the amount of $599,391 that was issued on the same date the Company issues the face value bonds of the amount of $425,000 which is January 1, 2021 ( 01/01/2021).
Therefore the original issue price of the bonds will be $599,391
why does crime exist?
Answer:
well for me I think
Explanation:
The world is polluted
A responsibility center in which the department manager is responsible for costs, revenues, and assets for a department is called:
a. a cost center
b. a profit center
c. an operating center
d. an investment center
Answer:
d. an investment center
Explanation:
The investment center is the center that has the department manager responsibility towards cost, revenues, and the assets for the particular department.
Mainly the divisional manager responsible for the revenue and the cost
In addition to this, they also make the decisions which investment should be considered that contains high returns
Therefore the option d is correct
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either product requires 0.4 direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $1,632,000.
Required:
1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product? Product H Product L Overhead cost per unit
1-b. Compute the total amount of overhead cost that would be applied to each product Product H Product L Total Total overhead cost
2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $816,000 assigned to Product H and $816,000 assigned to Product L If this suggestion is followed, how much overhead cost per unit would be assigned to each product? (Round your answers to 2 decimal places.)
Product H Product L
Overhead cost per unit
Answer:
1a. Product H $16,000
Product L $3,200
1b. Product H $1,360,000
Product L $272,000
Total $1,632,000
2. Product H $20.40
Product L $102.00
Explanation:
1-a. Calculation for how much overhead cost per unit would be applied to each product
Product H Product L
Number of units produced 40,000 8,000( a)
Direct labor-hours per unit (b) 0.40 0.40 (b)
(a) × (b)=Total direct labor-hours 16,000 3,200 Total =$19,200
Therefore Amount of hoverhead cost per unit applied to each product is :
Product H $16,000
Product L $3,200
1-b. Computation for the total amount of overhead cost that would be applied to each product
Product H Product L Total
Manufacturing overhead applied per unit
0.40 DLH per unit × $85.00 per DLH= $34.00 (a)
Number of units produced 40,000 8,000 (b)
(a) × (b)=Total manufacturing overhead applied $1,360,000 $272,000
Total=Product H $1,360,000+Product L $272,000
Total= $1,632,000
Predetermined overhead rate of $ 85.00 per DLH is calculated as:
Total manufacturing overhead $ 1,632,000(a)
Total direct labor-hours 19,200 DLHs(b)
(a) ÷ (b) =Predetermined overhead rate $ 85.00 per DLH
Therefore the total amount of overhead cost that would be applied to each product is :
Product H $1,360,000
Product L $272,000
Total $1,632,000
C. Calculation for how much overhead cost per unit would be assigned to each product
Product H Product L Total
Total manufacturing overhead assigned (a)
$816,000 $816,000 =$1,632,000
Number of units produced (b) 40,000 8,000
(a) ÷ (b) =Manufacturing overhead per unit $20.40 $102.00
Therefore the amount of overhead cost per unit would be assigned to each product is :
Product H $20.40
Product L -$102.00
8-4 Valuing Commercial Real Estate BuildingOne Properties is a limited partnership formed with the express purpose of investing in commercial real estate. The firm is currently considering the acquisition of an office building that we refer to simply as building B. Building B is very similar to building A, which recently sold for $36,960,000. BuildingOne has gathered general information about the two buildings, including valuation information for building A:
Answer:
the question is incomplete:
Buildings A and B are similar in size (80,000 and 90,000 square feet, respectively). However, the two buildings differ both in maintenance costs ($23 and $30 per square foot) and rental rates ($100 versus $120 per square foot). At this point, we do not know why these differences exist. Nonetheless, the differences are real and should somehow be accounted for in the analysis of the value of building B using data based on the sale of building A. Building A sold for $462 per square foot, or $36,960,000. This reflects a sales multiple of six times the building’s net operating income (NOI) of $6,160,000 per year and a capitalization rate of 16.67%.
NOI of building A = ($100 x 80,000 ft²) - ($23 x 80,000 ft²) = $6,160,000
NOI of building B = ($120 x 90,000 ft²) - ($30 x 90,000 ft²) = $8,100,000
building B's market value = NOI / capitalization rate = $8,100,000 / 0.1667 = $48,600,000
property value = $48,600,000 / 90,000 ft² = $540 per ft²
The fictional country of Anastialia is a small country with rich resources in minerals. In an 8 hr work day it can produce 100 pounds of silver or 50 pounds of copper. If Anastialia decides to produce copper instead of silver it is ignoring the fact that its silver production has a(n)________ to copper.
a. production advantage
b. absolute advantage
c. comparative advantage
Answer:
c. comparative advantage
Explanation:
As we know that
The one pound of silver would be equivalent to 0.5 pound of copper
And,
one pound of copper would be equivalent to 2 pounds of silver
based on this, there is a comparative advantage with respect to the silver production
Hence, the correct option is c.
Therefore all the other options are incorrect
Diamond and Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 130 baseballs per hour to sewing 234 per hour. The contribution margin per unit is $0.48 per baseball. Assume that any increased production of baseballs can be sold. The second machine is an automatic packing machine for the golf ball line. The packing machine will reduce packing labor cost. The labor cost saved is equivalent to $26 per hour. The sewing machine will cost $305,500, have an eight-year life, and will operate for 1,400 hours per year. The packing machine will cost $131,800, have an eight-year life, and will operate for 1,200 hours per year. Diamond and Turf seeks a minimum rate of return of 12% on its investments.Present Value of an Annuity of $1 at Compound InterestYear 6% 10% 12% 15% 20%1 0.943 0.909 0.893 0.870 0.8332 1.833 1.736 1.690 1.626 1.5283 2.673 2.487 2.402 2.283 2.1064 3.465 3.170 3.037 2.855 2.5895 4.212 3.791 3.605 3.353 2.9916 4.917 4.355 4.111 3.785 3.3267 5.582 4.868 4.564 4.160 3.6058 6.210 5.335 4.968 4.487 3.8379 6.802 5.759 5.328 4.772 4.03110 7.360 6.145 5.650 5.019 4.192A. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above.B. Determine the present value index for the two machines.C. If Diamond and Turf has sufficient funds for only one of the machines and qualitative factors are equal between the two machines, in which machine should it invest?
Answer:
A) Sewing machine:
initial outlay = -$305,500
net cash flow per year = (234 baseballs per hour - 130 baseballs per hour) x 1,400 hours x $0.48 per baseball = $69,888
NPV = -$305,500 + ($69,888 x 4.968) = -$305,500 + $347,203.58 = $41,703.58
Packing machine:
initial outlay = -$131,800
net cash flow per year = 1,200 hours x $26 per hour = $31,200
NPV = -$131,800 + ($31,200 x 4.968) = -$131,800 + $155,001.60 = $23,201.60
B) PVI of sewing machine = $347,203.58 / $305,500 = 1.137
PVI of packing machine = $155,001.60 / $131,800 = 1.176
C) They should invest in the packing machine since its PVI is higher, meaning that it increases the company's value by a higher amount per dollar invested.
Bantam company calculated its net income to be $77,600 based on the unadjusted trial balance. The following adjusting entries were then made for: Salaries and wages owed but not yet paid of $795. Interest earned but not received from investments of $755. Prepaid insurance premiums amounting to $555 have expired. Deferred revenue in the amount of $755 has now been earned. Required: Determine the amount of net income (loss) that will be reported after the adjustments are recorded.
Answer:
$77,760
Explanation:
After adjustment items of expenses will be deducted from the Net income, and items of income will be added to the net income.
Item of expenses = unpaid salary + Prepaid insurance (Expired)
Item of income = Interest earned + revenue
Net income after deduction = 77,600 - 795 - 555 + 755 + 755
Net income after deduction = $77,760
Three years ago, Adrian purchased 430 shares of stock in X Corp. for $70,950. On December 30 of year 4, Adrian sells the 430 shares for $64,070. (Leave no answers blank. Enter zero if applicable. Loss amounts should be indicated with a minus sign.)
a. Assuming Adrian has no other capital gains or losses, how much of the loss is Adrian able to deduct on her year 4 tax return?
Answer:
6,880
Explanation:
garcia company has 11,600 units of its product that were produced last year at a total cost of $174,000. the units were damaged in a rainstorm because the warehouse where they were stored developed a leak in the roof. garcia can sell the units as is for $2 each or it can repair the units at a total cost of $19,600 and then sell them for $5 each. calculate the incremental net income if the units are repaired
Answer:
If the company repairs the units, income will increase by $15,200.
Explanation:
Giving the following information:
Units= 11,600
Garcia can sell the units as is for $2 each or, it can repair the units at a total cost of $19,600 and then sell them for $5 each.
We will not take into account the original cost of production because they remain constant in both options.
Sell as-is:
Effect on income= 11,600*2= $23,200
Repair:
Effect on income= 11,600*5 - 19,600= $38,400
If the company repairs the units, income will increase by $15,200.
Eaglet Corporation has the following target and costs associated with its capital structure. Based on these parameters what is Eaglet Corporations weighted average cost of capital?
Target common equity weight: 80 percent
Target debt weight: 20 percent
Cost of equity: 15 percent
Cost of debt: 5 percent
Tax rate: 35 percent
A) WACC = 12.65 percent
B) WACC = 8.45 percent
C) WACC = 13.00 percent
Answer: A) WACC = 12.65 percent
Explanation:
WACC = (Cost of equity * weight of equity) + (weight of debt * cost of debt * (1 - tax rate)
= (0.15 * 0.8) + (0.2 * 0.05 * (1 - 0.35))
= 0.12 + 0.0065
= 12.65%