Sheffield Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Sheffield Corporation's anticipated annual volume of 524,000 units. Per Unit Total Direct materials $ 6 Direct labor $11 Variable manufacturing overhead $17 Fixed manufacturing overhead $3,144,000 Variable selling and administrative expenses $17 Fixed selling and administrative expenses $1,572,000 The company has a desired ROI of 25%. It has invested assets of $31,440,000. Compute the total cost per unit. Total cost per unit $enter the total cost per unit

Answers

Answer 1

Answer:

Total cost per unit using absorption costing = $34

Explanation:

Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit  

Full cost per unit= Direct material cost + direct labor cost + Variable production overhead + Fixed production overhead

Fixed production overhead = Budgeted overhead/Budgeted production units

unit cost for 2,000 units  

Fixed production overhead = $3,144,000/524,000= 6

Total cost = 6 + 11+ 17 = 34

Total cost per unit using absorption costing = $34


Related Questions

Why is it important for developers to be careful when using cascading deletes?

They may create orphaned records.
They may link to data in external databases.
They may delete more records than intended.
They may disconnect the bond between tables.

Answers

Answer:

C. They may delete more records than intended.

Explanation: Just answered it on edg. 2021

Answer:

(C) They may accidentally delete more records than intended.

Explanation:

You think the price of AMZN stock, which is currently $900 is likely to change significantly over the next three months, you are just not sure which direction. So you buy a long strangle position, with a call and put option, worth $10 and $3 per share, respectively, three months to expiration, and strike prices of 910 (call) and 890 (put). If at expiration AMZN is trading at $865, what is your net profit per share

Answers

the net profit per share would be 600

What factors do you need to consider when choosing financial institution?

Answers

Answer:

please give me brainlist and follow

Explanation:

The following key factors will help you to choose the best savings account for your needs:

Interest rate. ...

Minimum cash balance. ...

Presence or network of the bank/financial institution. ...

Service charges / ancillary fees. ...

Debit-card deals. ...

Doorstep banking facilities. ...

Disclaimer: Copyright Kotak Mahindra Bank Ltd.

the yellow company has a current ratio of 2.65 . The acid test ratio is 2.01 . The current liabilities of the are company $45,000 . Assuming there are no prepaid expenses the dollar amount of merchandise inventoey is

Answers

Answer:

Amount of inventory = $28,800

Explanation:

Given:

Current ratio = 2.65

Acid test ratio = 2.01

Current liabilities = $45,000

Prepaid expenses = $0

Find:

Amount of inventory

Computation:

Current ratio = Current assets / Current liabilities

2.65 = Current assets / 45,000

Current assets = $119,250

Acid test ratio = [Current assets - Inventory - Prepaid expenses] / Current liabilities

2.01 = [119,250 - Inventory - 0] / 45,000

90,450 =119,250 - Inventory

Amount of inventory = $28,800

Fred leases a taco store in the shopping center. In order to prepare his tacos, Fred installs a large, old stove to cook the meat. The lease runs out and Fred does not want to renew the lease. He leaves town and leaves the stove in the landlord's property. The lease contract did not mention the stove and the landlord is very unhappy. What is the legal situation now?

Answers

Answer:

The stove is a trade fixture, but Fred did not take it with him upon the expiration of the lease. Now it is the property of the landlord.

Explanation:

Since in the given situation it is mentioned that that lease would run out and he does not want to renew the lease also he leaves the stove in the property of the landlord. Due to this the landlord is very sad

So here the legal situation is that the stove would be classify as a trade fixture also he did not take it with him so now it would be the property of the landlord

The same would be considered  

Find below the financial statements for Kenning Corp. Income Statement Balance Sheet Sales $5,000 Assets $14,800 Debt $11,000 Costs 3,410 Equity 3,800 Net income $1,590 Total $14,800 Total $14,800 Assume no income taxes. Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid and next year's sales are projected to be $5,970. What is the EFN?

Answers

Answer: $972.74

Explanation:

From the information given, the external finance is calculated thus:

Sales growth = ($5970 - $5000) / $5000 × 100 = $970/$5000 × 100 = 19.4%

Then, we calculate the net income which will be:

= Sales - Cost

= $5970 - ($3410 × 1.194)

= $5970 - $4071.54

= $1898.46

Total asset = $14800 × 1.194 = $17671.20

Total equity = $3800 + $1898.46 = $5698.46

External financing needed:

= Total assets - Total equity - Debt

= $17671.20 - $5698.46 - $11,000

= $972.74

Brief Exercise 12-8 Partially correct answer. Your answer is partially correct. Try again. Sheffield, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,000 from sales $201,000, variable costs $176,000, and fixed costs $29,000. If the Big Bart line is eliminated, $20,100 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answers

Answer:

The Big Bart line should NOT be eliminated.

Explanation:

The analysis can be prepared as follows:

Sheffield, Inc.

An Analysis showing whether the Big Bart line should be eliminated.

Details                               Continue         Eliminate

                                               $                         $

Sales                                 201,000                  0

Variable costs                 (176,000)                  0    

Contribution margin         25,000                   0

Fixed costs                     (29,000)            (20,100)  

Net profit (loss)              (4,000)             (20,100)  

From the analysis above, it can be seen that eliminating the Big Bart line would increase the net loss by $16,100 (i.e. $20,100 - $4,000 = $16,100) from $4,000 to $20,100. Therefore, the Big Bart line should NOT be eliminated.

Item1 0.41 points Item Skipped eBookAskPrintReferencesCheck my workCheck My Work button is now enabledItem 1 Problem 10-42 (LO 10-1) (Algo) Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during law school (several years ago) that she is planning to use in her business. FMV at Time Purchase Converted to Asset Price Business Use Computer $ 5,800 $ 4,100 Printer 3,600 3,450 Desk 4,500 4,300 File cabinet 3,500 3,525 Using the above information, what is the depreciable basis that Brittany should use in her business for each asset

Answers

Well if the item is 0.41 you divide it over pie

A college graduate has gotten a job that requires frequent travel to different schools around the country. These schools hire her to help them create healthier meals in their cafeterias. She creates a full menu for each school and shows the school the nutritional benefits of each food.
Which two types of careers are part of this college graduate's job?

A. Education and sales
B. Food service and transportation
C. Sales and management
D. Education and food service​

Answers

D. Education and food services :)

i got it right

The two careers that are part of this graduate's job to travel around the nation and create healthier meals are D. Education and food service​.

What two careers are part of this job?

Education is one career because the college graduate will have to teach the staff in the schools she goes to, the nutritional benefits of the meals she suggests.

Food service is also involved in order to know which foods are best for the students.

#SPJ5

Find out more on food career choices at https://brainly.com/question/13243326.

The balance sheet of XYZ Bank appears below. All figures in millions of US Dollars. Assets Liabilities Short-term consumer loans (1-year maturity) $150 Equity capital (fixed) $120 Long-term consumer loans 125 Demand deposits (2-year maturity) 40 3-month T-Bills 130 Passbook savings 130 6-month T-Notes 135 3-month CDs 140 3-year T-Bond 170 3-month Bankers Acceptances 120 10-year Fixed Rate Mortgages 120 6-month Commercial paper 160 30-year Floating Rate Mortgages (rate adjusted every 9-months) 140 1-year Time deposits 120 2-year Time deposits 40 $970 $970 The gap ratio is

Answers

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Engler Company purchases a new delivery truck for $55,000. In addition, the sales taxes are $4,000. Engler also paints on the logo of the company on the side of the truck for $1,600. The truck license is an additional $160. The truck also undergoes a one-time safety testing for $290. Finally, the truck also requires a tune up and oil change for $500. What does Engler record as the cost of the new truck

Answers

Answer:

$61,390

Explanation:

Calculation to determine What does Engler record as the cost of the new truck

Using this formula

Cost of new truck=Purchase price+Sales tax, painting +Logo on the side of the truck +Safety testing +Tune up and oil change

Let plug in the formula

Cost of new truck=$55,000 + $4,000 + $1,600 + $290 +$500

Cost of new truck= $61,390

Therefore what Engler will record as the cost of the new truck is $61,390

Which person would most likely be in the market for a mortgage loan? Person A: I just got a great new job, so I want to buy a bigger house. I'd like to take out a big loan that I can pay off over a long time while I'm living in the new house. Person B: I want to buy a new video game, but I don't want to take out a real loan. I'd rather just get an advance on my next paycheck so I can buy the game right now. Person C: I just got into medical school, but the tuition is really expensive. I need to borrow some money to pay for school, and I'll pay it back after I start working as a doctor. Person D: I don't need to borrow money right now, but I want to have access to money whenever I might need it. It would be nice to be able to pay off some bigger purchases over time.​

Answers

Answer:

The answer is A

Explanation:

Mortgage loans are used for houses and real estate.

Person A would be most likely in the mortgage loan market.

What is a mortgage loan?

A mortgage loan is a type of borrowed amount taken from a lender for acquiring any kind of property.

Person A takes the mortgage loan from the market as he wants to acquire a new house. He is able to pay off the loan installments as he got a new job which shows that his financial status is good.

Therefore, the mortgage loan is most likely to be taken by Person A from the market.

Learn more about the mortgage loan in the related link:

https://brainly.com/question/15082835

#SPJ2

An outside supplier has offered to sell the company all of these parts it needs for $48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $273,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $8.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 70,000 units required each year

Answers

Answer:

the maximum amount that willing to pay is $99.10

Explanation:

The computation of the maximum amount that willing to pay is shown below:

Here the maximum per unit is

= $48.50 + (($17.80 + $19 + $1 + $17.10 - $8.20) × 70,000 units + $273,000) ÷ 70,000 units

= $48.50 +  (($46.70 × 70,000 units) + $273,000) ÷ 70,000 units

= $48.50 + $50.60

= $99.10

hence, the maximum amount that willing to pay is $99.10

​M&M's Proposition II suggests that in a world of no taxes and no​ bankruptcy, ________. A. in simple​ terms, as the firm adds more debt to the financing​ mix, the shareholders require a higher and higher return on equity such that it exactly offsets the use of the cheaper debt B. no matter what the debtequity ratio​ is, the Ra or WACC of the firm increases with debt C. the value of the firm is sensitive to the funding choice between debt and equity D. Statements​ A, B, and C are all incorrect.

Answers

Answer:

A

Explanation:

what are the limitations of SWOT ANALYSIS?​

Answers

I just want friends ‍♀️

If foreign manufacturers cut manufacturing costs and profit margins in response to a depreciation in the U.S. dollar, the effect of these actions is to a. lengthen the amount of time in which the depreciation leads to a smaller trade deficit. b. shorten the amount of time in which the depreciation leads to a smaller trade surplus. c. shorten the amount of time in which the depreciation leads to a smaller trade deficit. d. lengthen the amount of time in which the depreciation leads to a smaller trade surplus.

Answers

Answer:

a. lengthen the amount of time in which the depreciation leads to a smaller trade deficit.

Explanation:

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

The Modified Accelerated Cost Recovery System (MACRS) can be defined as a depreciation system that avails business owners or companies the ability and opportunity to recover or recoup the cost basis of physical assets that have experienced deterioration over a specific period of time.

In the United States of America, the Modified Accelerated Cost Recovery System (MACRS) is used mainly for tax purposes because it gives room for faster depreciation of a physical asset in its first years or initial usage and reduces depreciation as it is being used over a long period of time.

Hence, if foreign manufacturers cut or reduce their manufacturing costs and profit margins in response to a depreciation in the U.S. dollar, the effect of these actions is certainly to lengthen or increase the amount of time in which the depreciation in the U.S dollars leads to a smaller trade deficit.

A deficit can be defined as an amount by which money, falls short of its expected value.

In Financial accounting, deficit is usually as a result of revenue falling below expenses or expense exceeding revenue at a specific period of time.

For instance, if in a country liabilities exceeds assets or import exceeds export there would be a deficit in the financial account of the country. This is simply as a result of a country having to import more goods and services than it is exporting to other countries in trade.

In conclusion, a trade deficit is caused because the value of goods and services exported is lower than the value of goods and services being imported in a particular country.

Kayla is an accountant who donates her services to the Allegro Chorale, a nonprofit arts organization in Odessa, Texas. Kayla prepares monthly financial statements for Allegro for all of the following reasons EXCEPT _______. a. Kayla can identify underserved marketing segments and recruit them to join the Allegro Chorale b. Kayla can generate awareness of and long-term benefits for the Allegro Chorale c. donated services create goodwill d. donating her services helps Marci make personal contacts in the community

Answers

Answer: a. Kayla can identify underserved marketing segments and recruit them to join the Allegro Chorale

Explanation:

Some of the reasons why Kayla prepares the monthly financial statement will be to create goodwill, and help generate long term awareness for the organization.

We should note that the identification of underserved marketing segments and then recruiting them to join the Allegro Chorale isn't the role of Kayla, therefore this isn't one of the reason that she's preparing the financial statement.

On December 31, 2016, Krug Company reported pretax income of $300,000 prior to the following adjusting entries: Depreciation expense: $38,000; Accrued sales revenue: $36,000; Accrued expenses: $17,000; Used insurance: $4,000; the insurance was initially recorded as prepaid. Rent revenue earned: $2,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. How much is Krug's pretax income after the adjusting entries

Answers

Answer: $279,000

Explanation:

Accrued revenue and expenses should be accounted for because they have been realized and incurred in the current period.

Used insurance and depreciation should be accounted for as the expenses they are and rent revenue earned should be treated as revenue.

Pretax income after adjustments:

= Pretax income + Accrued sales revenue + rent revenue - Depreciation - Accrued expenses - Insurance

= 300,000 + 36,000 + 2,000 - 38,000 - 17,000 - 4,000

= $279,000

Swifty Corporation estimates its sales at 190000 units in the first quarter and that sales will increase by 11000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at

Answers

Answer:

$5,250,500

Explanation:

Budgeted cash collection for third quarter = Cash sales + Collection of credit sale of 3rd quarter + Collection of credit sale of 2nd quarter

Budgeted cash collection for third quarter = [(190,000+22,000)*$25*40%] + (212,000*$25*60%*70%) + (201,000*$25*60%*30%)

Budgeted cash collection for third quarter = $2,120,000 + $2,226,000 + $904,500

Budgeted cash collection for third quarter = $5,250,500

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.12 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio

Answers

Answer:

Beta for the other stock = 1.88

Explanation:

A  portfolio is said to be as risky as the market where its beta is exactly equal to 1. A beta of greater than 1 implies the portfolio is riskier than the average market, and less risky where the beta is less than 1.

A portfolio that has an equal proportion of three asset would mean a weight of 1/3 for each asset

So we can represent the portfolio beta as follows:

1 = 1/3×(0) + 1/3× (1.12) + 1/3×y

1= 0.37 + 0.33y

0.33y = 0.626

y= 0.626/0.33

y= 1.88

Beta for the other stock = 1.88

Which of the following distinguishes why farmers of commodities are referred to as price takers?
The producer will not take a profit from the commodity if the price changes yearly.
The producer has no control over the market price and must take the price offered
The producer must seek out a fair price from buyers and take the price they all agree on
The producer is not legally allowed to take a price over the value created by the government

Answers

Answer:The producer has no control over the market price and must take the price offered

Explanation: it says it in the article

You are an American firm considering opening a factory in France. You believe that your initial costs will be $5 million, and your expected after-tax cash flows will be $350,000/year for 30 years. You estimate an all-equity Beta of .8, that the risk-free rate is 1%, and that the market risk-premium is 7%. You are subject to a 30% tax rate. To the nearest $10, what is your APV

Answers

Answer:

An American Firm in France

The APV is:

= $1,251,150

Explanation:

a) Data and Calculations:

Initial cost of investment = $5 million

Expected annual after-tax cash flows = $350,000

Duration of cash flows and investment = 30 years

All-equity Beta = .8 or 80% (.8 * 100)

Risk-free rate = 1%

Market risk-premium = 7%

Market rate = 8% (1% + 8%)

Expected return (after-tax)= .8 * 8% = 6.4%

The present value of the cash flows = $6,251,150

The APV (Adjusted Present Value) = $1,251,150 ($6,251,150 - $5,000,000)

From an online financial calculator:

N (# of periods)  30

I/Y (Interest per year)  6.4

PMT (Periodic after-tax Cash flows)  $350,000  

Results

PV = $6,251,146.79

Sum of all periodic receipts (after-tax) = $10,500,000.00

Turning down promotion interviews for positions you are not interested in is good policy.
Please select the best answer from the choices provided
OT
F

Answers

Answer:

False

Explanation:

The positions which you dont want in an organization but for that you would get the promotion interviews so it is not a good policy as the person have some kind of interest towards his or her work i.e. lacking here. Also without interest the person can provide the satisfaction work to the company

So here in the given situation it is not considered to be a good policy

Therefore the given statement is false

Xila-Fone Corp. expects to earn $4.00 per share next year, with an expected payout of 30%. Investors expect the dividend to grow at a constant rate of 8% for the foreseeable future. The risk-free rate is 5%, and the beta that is 10% more volatile than the market as a whole, and the expected return on the market is 14%. What is the estimated price of the stock

Answers

Answer:

P0 = $17.39130 rounded off to $17.39

Explanation:

The constant growth model of dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under constant growth DDM is,

P0 = D1 / (r - g)

Where,

D1 is the dividend expected in Year 1 or next yearg is the constant growth rate in dividends r is the discount rate or required rate of return

However, to calculate the Price of the stock today, we must first calculate the required rate of return (r) for the stock. The required rate of return can be calculated using the CAPM equation. The equation is as follows,

r = rRF + Beta  *  (rM - rRF)

Where,

rRF is the risk free rate rM is the expected return  on market

We know the risk free rate and expected return on market  and we also know that the beta of market is always equal to 1. So, the beta of stock which is 10% more volatile than the market will be,

Beta of stock = 1 * 10%  + 1   = 1.1

r = 0.05  +  1.1  *  (0.14 - 0.05)

r = 0.149 or 14.9%

The dividend expected for next year will be,

D1 = 4 * 30%  =  $1.2 per share

Using the DDM,

P0 = 1.2 / (0.149 - 0.08)

P0 = $17.39130 rounded off to $17.39

Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 12%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.30%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

Answers

Answer:

11.36%

Explanation:

According to the scenario, computation of the given data are as follows,

Debt = 45%

Common equity = 55%

YTM = 12%

Tax rate = 25%

WACC = 10.30%

So, we can calculate the cost of equity by using following formula,

WACC = Debt × YTM (1 - Tax rate) + Common Equity × Cost of Equity

By putting the value, we get

10.30% = 45% × 12% × (1 - 25%) + 55% × Cost of Equity

0.103 = 0.45 × 0.12 ( 0.75) + 0.55 × Cost of Equity

0.103 = 0.0405 + 0.55 × cost of equity

0.103 - 0.0405 = 0.55 × cost of equity

Cost of equity = 0.0625 ÷ 0.55

So, Cost of equity = 0.1136 or 11.36%

2. Why might this be the perfect advice for beginning investors?

Answers

Explanation:

Getting the right education is one of the best pieces of advice I would send to someone who is only learning to invest. Investing is all about purchasing firms that you know and appreciate, that have a strong competitive edge, and that have a solid management team, all at a decent price.

Sheffield Corp. adopted the dollar-value LIFO method of inventory valuation on December 31, 2019. Its inventory at that date was $1010000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Date Inventory at Current Prices Current Price Index December 31, 2020 $1287000 106 December 31, 2021 1429000 124 December 31, 2022 1627000 129 What is the cost of the ending inventory at December 31, 2020 under dollar-value LIFO

Answers

Answer: $1226400

Explanation:

The cost of the ending inventory at December 31, 2020 under dollar-value LIFO will be calculated as:

= $1010000 + [($1287000/106 × 100) - $1010000] × 106/100

= $1010000 + ($1214151.4 - $1010000) × 1.06

= $1010000 + ($204150.94 × 1.06)

= $1010000 + $216400

= $1226400

Therefore, the cost of the ending inventory at December 31, 2020 under dollar-value LIFO is $1226400.

Evan is single and has AGI of $277,300 in 2020. His potential itemized deductions before any limitations for the year total $52,300 and consist of the following: Medical expenses (before the AGI limitation) $29,000 Interest on home mortgage 8,700 State income taxes 9,500 Real estate taxes 3,600 Charitable contributions 2,500 After all necessary adjustments are made, what is the amount of itemized deductions Evan may claim

Answers

Answer:

$24,402.50

Explanation:

Medical expenses can be deducted only if they are above 7.5% of your AGI:

$277,300 x 7.5% = $20,797.50

Medical deductions = $29,000 - $20,797.50 = $8,202.50

Evan can deduct $8,700 in mortgage interests

Total deductions for state and local taxes for a single filer = $5,000

Charitable contributions are also deductible = $2,500

total deductions = $8,202.50 + $8,700 + $5,000 + $2,500 = $24,402.50

Inventory records for Marvin Company revealed the following:
Date Transaction Number
of Units Unit
Cost
Mar. 1 Beginning inventory 990 $7.25
Mar. 10 Purchase 570 7.73
Mar. 16 Purchase 710 8.20
Mar. 23 Purchase 520 8.60

Marvin sold 1,900 units of inventory during the month. Cost of goods sold assuming FIFO would be

Answers

"8.60" (and any subsequent words) was ignored because we limit queries to 32 words.

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .90. The company has a target debt-equity ratio of .60. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 3.3 percent. The company has one bond issue outstanding that matures in 26 years, a par value of $2,000, and a coupon rate of 6 percent. The bond currently sells for $2,130. The corporate tax rate is 24 percent.
a. What is the company’s cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
c. What is the company’s weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answers

Answer:

a. Cost of debt = 4.56%

b. Cost of equity = 10.23%

c. WACC = 8.46%

Explanation:

a. What is the company’s cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of debt = Coupon rate * (100% - tax rate ) = 6% * (100% - 24%) = 4.56%

b. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity = Risk free rate + (Beta * (Market rate - Risk free rate)) = 3.3% + (0.90 * (11% - 3.3%)) = 10.23%

c. What is the company’s weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC = (Cost of debt * Debt to total assets ratio) + (Cost of equity * Equity to total assets ratio) ………… (1)

Equity = Total assets - Debt

Debt to equity ratio = Debt / Equity = 0.60

0.60 = Debt / (Total assets - Debt)

0.60 * (Total assets - Debt) = Debt

0.60Total assets - 0.60Debt = Debt

0.60Total assets = Debt + 0.60Debt

0.60Total assets = (1 + 0.60)Debt

0.60Total assets = 1.60Debt

Debt / Total assets = 0.50 / 1.60 = 0.3125

Equity to total assets ratio = 1 - Debt to total assets = 1 - 0.3125 = 0.6875

Substituting all the relevant values into equation (1), we have:

WACC = (4.56% * 0.3125) + (10.23%* 0.6875) = 8.46%

Other Questions
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