Using the same information from before, please calculate the WACC of Correct Inc. assuming a risk free rate of 2.5%, a company Beta of 1.2 and a market risk premium of 6%.

Answer:

Payback period=2 years 5  months

Payback period=3 years  8 months

Explanation:

The payback period is the estimated length of time in years it takes  .

It is the number of years it takes the cash project to break-even

a) Payback period

Total cash flow for two years = 750×  2 = 1500.000

Balance of cash flow required to make up= 1800000- 1500,000  300,000

Payback period = 2 years + 300,000/750,000× 12 months=  2 years 5  months

Payback period=2 years 5  months

b) Payback period

Total cash flow for 3 years = 450,000 + $225,000 +600,000=1,275 ,000

Balance o cash required to make up 1800,000 = 1,800,000 -1275,000= 525,000

Pay back period = 3 years + 525,000/750,000×  12 months

                            = 3 years  8 months

Payback period=3 years  8 months

Answer:

The answer is $18.29

Explanation:

We have many formulas to arriving at the stock price but here we use Gordon growth model.

Formula for getting stock price is:

D1/r - g

Where:

D1 - is the next year dividend or expected dividend to be paid next.

r is the rate of return

g is the growth rate

$0.75/0.105 - 0.064

$0.75/0.041

$18.29.

Therefore, the stock's current price is $18.29

Answer: b. select appropriate corporate-level strategies

Explanation:

Prior to setting pricing options for its products to maximize profit, a company must select appropriate corporate-level strategies.

This is necessary in order to ensure that the strategies aligns with what the organization is willing to do in order to achieve its profit maximization goal.

Answer: $35

Explanation:

Profit will be the Total Revenue less the total costs involved with selling the goods.

Total Revenue at $16 is $640.

Total Cost at $16 is $605.

Profit = 640 - 605

= $35

Note; Your question has $15 as the maximizing price which is not available in the table. It might be a typo so I attached the question.

Answer: False

Explanation:

Licensing involves a company giving another company in another country/market permission to produce its products or use its likeness. The company that gets the license will then pay the parent company specified amounts for being able to do so.

This method of international business is cheap as the company licensing will see its brand spread to other countries without actually having to worry about set-up costs in the other country which can be very high. It is therefore one of the easiest methods of expanding to international markets there is.

Answer:

$32,264.07

Explanation:

The computation of the Break-even EBIT  is shown below:

(EBIT ÷ Number of shares) = (EBIT - Interest) ÷ Number of shares  

(EBIT ÷ 10,900) = (EBIT - $66,000 × 0.08) ÷ (10,900 - (66,000 ÷ $37))

(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (10,900 - 1,783.78)

(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (9116.22)

After solving this, the value of break-even EBIT is $32,264.07

Answer:

Interest per six months =$64,750 .

Explanation:

Bonds are instruments used by companies, governments and other entries to borrow from the public.

They represent a contractual agreement where  the borrower commits to pay a percentage of the principal amount borrowed plus the principal amount to the lender or investor.

The proportion of the amount borrowed which is paid as interest is called coupon. The interest payment is computed as the the coupon rate in percentage multiplied by the amount borrowed.

Interest payment = Coupon rate (%) × Nominal Value

 Annual interest payment    = 7%  × 1,850,000 =$129,500

Semi-annual interest payment = Annual interest payment/2

Semi-annual interest payment =129,500 /2 =64,750 .

Interest per six months =$64,750 .

Note we had to divide by 2 because they are two six months in a year.

Answer:

b) 32%

Explanation:

Formula for calculating cost of equity is given as ;

r levered = r levered + ( debt / equity × ( r unlevered - cost of debt) × ( 1 - tax)

r unlevered is the cost of an unlevered equity = 16.0%

Debt = $500,000

Cost of debt = 12%

Equity = unknown

Firstly, we need to calculate the value of the firm and the formula is denoted by;

EBIT ( 1 - tax ) / Unlevered cost of equity + ( debt × tax )

= $100,000 ( 1 - 30% ) / 16% + ( $500,000 × 30% )

= $100,000 ( 0.7 ) /0.16 + $30,000

= $437,500 + $150,000

= $587,500

r levered = 16% + ( $500,000 / ( $587,500 - $500,000 ) × ( 16% - 12% ) × ( 1 - 30%)

= 0.16 + ( $500,000 / 87,500 ) × 0.04 × ( 0.7 )

= 0.16 + 5.71 × 0.04 × 0.7

= 32%

Answer:

4i8484884858585848484i

Answer:

e banking

Explanation:

it is called  e banking ( electronic), because Midhun is using both deposit and withdraw money through internet

Answer:

After tax cost of debt = 0.049 or 4.9%

Explanation:

The after tax cost of debt is the rate of debt after deducting the benefit from tax savings due to interest payments required by the debt which are deductible before calculating tax. The after tax cost of debt is somewhat an effective cost of debt. It is calculated using the following formula,

After tax cost of debt = Cost of debt * (1 - tax rate)

After tax cost of debt = 0.07 * (1 - 0.3)

After tax cost of debt = 0.049 or 4.9%

Answer:

B,C

Explanation:

An excise tax is actually a tax that is levied on a good at purchase.

Cigarettes and tissue paper are good candidates for excise duty. This is because of the fact that both goods are inelastic. There would be no decrease in their consumption if an excise tax is placed on them. People would still purchase them. Tissue paper has no substitute while cigarette would still have buyers regardless of an increase in price.

Answer: credible commitment

Explanation:

From the question, we are informed that BioGrow Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine but that the project required huge capital investments, and its research partner was not ready to solely face the risks involved.

Therefore, to gain its partner's confidence and to prove its involvement, BioGrow Pharma invested $100 million in the project. This investment made by BioGrow Pharma will result in a credible commitment.

Answer:

The Company should undertake project A.

Explanation:

The finance of projects is usually done through pooling of funds, that is using various sources of finance. The WACC represents the return required by providers of this finance and also shows the risk of the company.

A company will always accept projects that provide a return higher that their weighted average cost of capital (risk) and reject any project offering a return below the WACC.

Conclusion :

The Company should undertake project A as this gives a return higher than the WACC of 8.5%.

Answer:

Under CAPM:

Re = Rf + Beta(Rm - Rf)

Rf = 5%

Rm - Rf = 6%

Beta = 1.25

Re = 5% + (1.25 x 6%) = 12.5%

Under dividend discount model:

Re = (Div₁ / P₀) + g

Div₁ = $1.20

P₀ = $35

g = 8%

Re = ($1.20 / $35) + 8% = 11.43%

Under bond yield plus risk premium approach:

Re = Pre-tax cost of debt + risk premium over its own debt

Pre-tax cost of debt = 7%

risk premium over its own debt = 4%

Re = 7% + 4% = 11%

The highest cost of equity results from the CAPM model and it is 12.5% while the lowest results from using the bond yield plus risk approach (11%), the difference is 1.5% between them.

Answer:

d. $36

Explanation:

The Contribution margin is the net of selling price and variable cost of a product. It is calculated by deducting the variable cost from the selling price of a product.

                                          Cake   Pie    Cookies

Current selling price          $30    $18    $5

Variable cost                      $12     $7      $1

Contribution margin           $18     $11     $3

Production hours                2        1.5     0.25

Contribution margin/hr.     $9     $7.33  $12

Required Contribution margin per hour of cake = $12

Required Contribution margin = $12 x 2 = $24

Required Selling Price = Contribution margin + variable cost = $24 + $12 = $36

Note there is a mistake in the calculation of Contribution margin of Cookies as it is given $3 but after deducting the variable cost from selling price is should be $4 ( $5 - $1 ), I used the given contribution margin for the calculation.

Answer:

$5.272

Explanation:

The computation of the standard cost of the ingredients for one gallon of wine is shown below:-

But before that we need to do the following calculations

3,360 ounces of grape concentrate at $0.02 per ounce is (Considering 4%)

= 3,360 × $0.02 ÷ 96%

= $70

54 pounds of granulated sugar at $0.55 per pound is (Considering 10%)

= 54 × $0.55 ÷ 90%

= $33

60 lemons at $0.90 each is (Considering 25%)

= 60 × $0.90 ÷ 75%

= $72

150 yeast tablets at $0.26 each is

= 160 × $0.26

= $41.6

250 nutrient tablets at $0.14 each is

= 250 × $0.14

= $35

2,400 ounces of water at $0.005 per ounce is

= 2,400 × $0.005

= $12

Therefore 50 gallon cost is = $70 + $33 + $72 + $41.6 + $35 + $12

= $263.6

So, cost per gallon = $263.6 ÷ 50

= $5.272

Answer:

the "substantial user" of the facility built with the proceeds of the issue.

Explanation:

An Industrial revenue bond (IRB) can be defined as any municipal debt security issued by a local or state government agency with respect to a private firm which intend to undergo a particular project such as building facilities,  purchasing heavy machinery or equipments.

The interest income received from older Industrial revenue bonds (IRB) may be taxable to the holder at regular income tax rates if the holder is the "substantial user" of the facility built with the proceeds of the issue because in the true sense it is only beneficial to the holder and not the larger community.

Answer: The person fills "silence" during conversations

Explanation:

Culture is simply regarded as people's way of life. The way if life include their food, the kind of music they listen to, their religion, language, their beliefs, values etc.

Someone who is not culturally competent in working with others from different cultures would usually be silent during conversations. This is because the person doesn't know much about the culture and can't really be involved in the conversation.

Answer:

$63

Explanation:

The computation of the expected common stock market price per share for the next year is shown below:

Price earning ratio = Share price ÷ earning per share

where

Price earning ratio is 7

Earning per share is

= (Net income - preference dividend) ÷ number of common shares outstanding

= {($45 million - $5 million) × (1 - 0.30) - $10 million)} ÷ 2 million shares

= $9

Now placing these values to the above formula

So, the expected common stock market price is

= 7 × $9

= $63

Answer: 1.2

Explanation:

The Coefficient of Variation tells the accuracy of the mean. If it is high then there is a large dispersion around the mean. A smaller figure indicates that the mean is more accurate/ precise.

Coefficient of Variation = Standard Deviation / Expected Return

Coefficient of Variation = 30%/25%

Coefficient of Variation = 1.2

Question Completion:

Requirement. Identity two types of short-term finance Akram could use when the farm income is low

Answer:

Akram's Farm

Akram's farm can make good use of the following short-term financing sources:

1. Akram's farm can use Accounts Payable to provide short-term trade finance when the farm buys farm inputs, equipment, and other supplies on credit.  The farm's Accounts Payable can provide interest-free trade loans by allowing the farm to take longer time to settle the suppliers.  But, the farm should not miss out on cash discounts - an important source of trade finance.

2. Akram's farm can generate finances by ensuring early collections of the  Accounts Receivable.  Akram's farm can also go ahead and borrow on the accounts receivable through short-term bank loans guaranteed on the accounts.  The farm can also factor the accounts receivable by selling them to factoring and finance houses for less.

Explanation:

Akram's farm is still a small farm that is not yet formed as a company.  The immediate concentration is growing the entity and starting the processes for changing its corporate status so that it can take advantage of the sources of finance available to companies.

Question Completion:

Safety Point Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $50,000 and decrease fixed selling and administrative expenses by $10,000.

Answer:

1. Differential Analysis, showing Safety Point Dropping the Industrial Systems Product Line:

Net Sales Revenue                     $370,000

Cost of Goods Sold:

 Variable                                         46,000

 Fixed                                           269,000

Total Cost of Goods  Sold             315,000

Gross Profit                                    55,000

Selling and Administrative Expenses:

 Variable                                       72,000

 Fixed                                           57,000

Total Selling and Administrative

 Expenses                                  129,000

Operating Income  (Loss)         ($74,000)

2. Safety Point Company's Contribution Margin Income Statements for the year ended May 31, 2018, under the two alternatives:

                                                     Without                 With

                                                        Industrial Systems

Net Sales Revenue                     $370,000          $710,000

Variable costs:

 Cost of Goods Sold                      46,000               82,000

 Selling and Administrative           72,000              137,000

Total Cost of Goods  Sold              118,000            219,000

Contribution Margin                    252,000            491,000

Fixed Expenses:

 Cost of goods sold                   269,000            319,000

 Selling and Administrative         57,000              67,000

Total  Fixed Expenses                326,000           386,000

Operating Income  (Loss)         ($74,000)         $105,000

3. The comparison in requirement 2 shows that eliminating the Industrial Systems Product Line makes Safety Point Company unprofitable with an operating loss of $74,000.  This loss cannot be compared to the total operating income of $105,000 which is made with the industrial systems.  So, it is not the Industrial System Product line that is causing Safety Point Company to record a loss of $56,000.  It is the fixed cost of $60,000 which cannot be eliminated with the elimination of the Industrial System product line that causes the loss and reduces total operating for the company.

Explanation:

a) Data:

Safety Point

Income Statement for the year ended May 31, 2018:

                                                              Product Line

                                                      Industrial      Household

                                                      Systems        Systems           Total

Net Sales Revenue                     $340,000      $370,000      $710,000

Cost of Goods Sold:

 Variable                                         36,000          46,000          82,000

 Fixed                                           250,000          69,000        319,000

Total Cost of Goods  Sold            286,000          115,000        401,000

Gross Profit                                    54,000         255,000       309,000

Selling and Administrative Expenses:

 Variable                                       65,000            72,000        137,000

 Fixed                                            45,000           22,000         67,000

Total Selling and Administrative

 Expenses                                    110,000           94,000      204,000

Operating Income  (Loss)          ($56,000)       $161,000     $105,000

Answer:

$30,511.30

Explanation:

The double declining method was used for two years

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life) = 2 /25 = 0.08

Depreciation expense in 2020 = 0.08 x $900,000 = $72,000

Book value =  $900,000 - $72,000 = $828,000

Depreciation expense in 2021 = 0.08 x $828,000 = $66,240

book value = $828,000 - $66,240 = $761,760

Straight line depreciation expense = (book value - Salvage value) / useful life

useful life = 25 - 2 = 23

book value = $761,760

salvage value = $60,000.

( $761,760  - $60,000. ) / 23 = $30,511.30

The depreciation expense for the remaining useful life of the asset would $30,511.30

Answer:

True

Explanation:

The cost was bigger than they had budgeted for, so it was an unfavorable variance.

Answer:

a) $21.63

b) $4,433,125

Explanation:

plan I, total stocks outstanding = 205,000

plan II, total stocks outstanding = 125,000, and $1,730,000 in debt ($1,730,000 x 8% = $138,400 in interests)

under MM proposition I, a firm's total value is equal whether it uses external financing (debt) or not:

205,000P₀ = 125,000P₀ + $1,730,000

205,000P₀ - 125,000P₀ = $1,730,000

80,000P₀ = $1,730,000

P₀ = $1,730,000 / 80,000 = $21.625 = $21.63

the firm's total value = $21.625 x 205,000 = $4,433,125

Pfd Company has debt with a yield to maturity of 7.5%, a cost of equity of 13.5%, and a cost of preferred stock of 9.5%. The market values of its debt, preferred stock, and equity are $10.5 million, $3.5 million, and $24.5 million, respectively, and its tax rate is 40%. What is this firm's weighted average cost of capital (WACC)?

Answer:

10.68%

Explanation:

As we know that:

WACC = Ke * Ve / (Ve + Vpref + Vd (1-Tax))

+   Kd * Vd*(1-tax) / (Ve + Vpref + Vd*(1-Tax))

  +   Kpref * Vpref / (Ve + Vpref + Vd (1-Tax))

Here

Ke is 13.5%

Pre tax Kd is 7.5%

Kpref is 9.5%

Ve is value of equity and is $24.5 million

Vpref is value of equity $3.5 million

Vd is $10.5 million

Tax rate is 40%

By putting the values, we have:

WACC =       13.5% *$24.5 / ($24.5m + $3.5m + $10.5m (1-40%))

                   + 7.5% * (1-40%) * $45m / ($24.5m + $3.5m + $10.5m (1-40%))

                   + 9.5% * $3.5m / ($24.5m + $3.5m + $10.5m (1-40%))

WACC = 0.045 * 0.273   +   0.095 * 0.091  +  0.135 * 0.636

= 10.68%

Answer: Data analytics

Explanation:

Data analytics simply has to do withcanalyzing raw data to make conclusions about a particular information. Data analytics is used by organizations in order to optimize their business performance.

Kroger can use data analytics gathered from ClickList orders to determine which products they should keep more or less of in stock.

Answer:

A. Trade margin

Explanation:

The profit obtained from trading operations is known as gross profit or trade margin.This is calculated as sales less costs of goods sold.

The difference between total sales revenue and total cost of goods sold is the gross marketing contribution.

The following information is considered:

Therefore we can conclude that the correct option is B.

Learn more: brainly.com/question/16115373