Answer: c. She can deduct $25,000 because her rental expenses exceeded her rental income
Explanation:
You are allowed a deduction when your rent expenses exceeds your rent income by the amount that the rent expense exceeds your net income by however, this deduction is limited to a maximum of $25,000.
This only applies however if the tax payer's adjusted gross income for the year is less than $100,000 which it is in this case.
= Rental expense - rent income
= 80,000 - 55,000
= $25,000
She can deduct $25,000.
The correct option is c. She can deduct $25,000 because her rental expenses exceeded her rental income
The calculation is as follows:
= Rental expense - rent income
= 80,000 - 55,000
= $25,000
She can deduct $25,000.
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Rajiv lives in Houston and runs a business that sells pianos. In an average year, he receives $851,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $476,000; he also pays wages and utility bills totaling $281,000. He owns his showroom; if he chooses to rent it out, he will receive $71,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Rajiv does not operate this piano business, he can work as an accountant, receive an annual salary of $34,000 with no additional monetary costs, and rent out his showroom at the $71,000 per year rate. No other costs are incurred in running this piano business.
a. What are Rajiv's explicit costs of selling pianos?
1. The salary Rajiv could earn if he worked in an accounting firm.
2. The wages and unitilty bills that Rajiv pays.
3. The wholesale cost for pianos that Rajiv pays the manufacturer.
4. The rental income Rajiv could receive per year if he chose to rent his showroom out.
b. What is the accounting profit of Rajiv's piano business?
1. $780,000
2. $65,000
3. $40,000
4. $-40,000 ($40,000 accounting loss)
5. $110,000
c. What is the economic profit of Rajiv's piano business?
a. $65,000
b. $40,000
c. $780,000
d. $-40,000 ($40,000 economic loss)
e. $110,000
Answer and Explanation:
The computation is shown below:
a. The explicit cost of selling pianos would involve the wages & salaries expense and the wholesale cost that he pays the manufactured. These are considered as actual and would be added in the accounting
b. The accounting profit would be
Accounting profit is
= revenue - explicit cost
= $851,000 - $476,000 - $281,000
= $94,000
this is the answer and the options that are given are wrong
c. The economic profit would be
= Accounting profit - opportunity cost
= $94,000 - $34,000 - $71,000
= -$11,000
this is the answer and the options that are given are wrong
Marigold Corp. purchased equipment on November 1, 2020 and gave a 3-month, 9% note with a face value of $86000. The December 31, 2020 adjusting entry is:____.a) debit Interest Expense and credit Interest Payable, $5,400.
b) debit Interest Expense and credit Interest Payable, $900.
c) debit Interest Expense and credit Interest Payable, $1,350.
d) debit Interest Expense and credit Cash, $900.
The options provided in the question are incorrect.
Answer:
31 Dec 2021
Interest expense 1290 Dr
Interest Payable 1290 Cr
Explanation:
Under the accrual basis or principle of accounting, we match the revenue with the expenses and record the transactions in the period to which they relate to rather than when the cash is paid or received. This means that the interest payment that is accrued for time period relating to this year should be recorded as an expense in the current period and as a liability as it will be paid in the next period. Thus, the interest on the note relating to 2 months from November 2020 to December 2020 will be recorded as follows,
Interest expense = 86000 * 0.09 * 2/12 = 1290
31 Dec 2021
Interest expense 1290 Dr
Interest Payable 1290 Cr
What are closing entries and why are they important in accounting?
Answer:7
Explanation:14
Answer:
The purpose of the closing entry is to reset the temporary account balances to zero on the general ledger, the record-keeping system for a company's financial data. Temporary accounts are used to record accounting activity during a specific period.
Explanation:
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net operating income will: (Do not round intermediate calculations.)
decrease by $3,125.
increase by $20,625.
decrease by $15,000.
decrease by $31,875.
Sales 3,000 Units
Sales Price $70
Variable Cost $50
Fixed Cost $25,000
Answer: decrease by $31,875
Explanation:
Net Operating income;
= Sales - variable cost - fixed cost
= (70 * 3,000) - ( 50 * 3,000) - 25,000
= $35,000
Sales volume decreases by 25%;
= 3,000 * ( 1 - 25%)
= 2,250 units
Variable cost per unit increases by 15%;
= 50 * ( 1 + 15%)
= $57.50
New Net Operating income;
= (70 * 2,250) - (57.50 * 2,250) - 25,000
= $3,125
Net Operating income change;
= 3,125 - 35,000
= -$31,875
Decrease by $31,875
The most recent price activity in this chart is a quadruple top breakout. The box size is $0.50 and the reversal size is three boxes. What is the price objective for the breakout using the horizontal count method?a. $19.00b. $21.50c. $12.50d. $22.00
Answer:
a. $19.00
Explanation:
Note: The graph is as attached below
The low of the column where a quadruple top breakout occurs is $8.5 and width is 7 and box size is 0.5
The width of the pattern is 7 which is multiplied by 0.5 which is the box size and the reversal size of 3 for an Extension estimate (7 x 0.5 x 3 = $10.5).
Now, $10.5 is added to the low of the column and hence price objective is $10.5 + $8.5 = $19
Blue Enterprises reported cost of goods sold for 2020 of $1,307,500 and retained earnings of $5,383,000 at December 31, 2020. Blue later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $118,630 and $36,930, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.
Answer: See explanation
Explanation:
Based on the information given in the question, the corrected amounts for 2020 cost of goods sold would be:
= $1307500 + $36930 - $118630
= $1225800
The corrected Retained earnings would be:
= $5,383,000 - $36,930
= $5,346,070
What budgeting style is used by Ford Motor company?
Answer:
Marketing
Explanation:
Use the information for the question(s) below. Rosewood Industries has EBIT of $450 million, interest expense of $175 million, and a corporate tax rate of 35% If Rosewood had no interest expense, its net income would be closest to:___________ a. $430 million b. $160 million c. $290 million d. $405 million
Answer:
$180 million
Explanation:
Net income is calculated as;
= (EBIT - Interest expense)(1 - tax)
Given that;
EBIT = $450 million
Interest expense = $175 million
Tax = 35%
Net income = (450 - 175)(1 - 0.35)
Net income = (275)(0.65)
Net income = $178.75
Net income = $180 million approximated.
Rosewood's net income is closest to $180 million.
How Many Pints of Blackberries?
The pleasure you get from each pint of freshly picked blackberries is $2.00. It takes you 12 minutes to pick the first pint, and each additional pint takes an additional 2 minutes (14 minutes for the second pint, 16 minutes for the third pint, and so on). The opportunity cost of your time is $0.10 per minute.
a. How many pints of blackberries should you pick? Illustrate with a complete graph.
Answer:
none because they could be poiseness
Explanation:
Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending.
For each form of private spending, indicate whether it represents consumption or investment.
Private Spending Consumption Investment
Laundromats buying washing machines
People buying houses
People buying newspapers
People buying food
For each form of government spending, indicate whether it represents consumption or investment.
Government Spending Consumption Investment
Payment for public safety employees
Building hospitals
Building roads
Buying military equipment
Explanation:
Note, for private spending, consumption refers to purchases usually made for present needs, while investment refers to purchases that may provide. For government spending, consumption refers to purchase made to care for the immediate welfare or needs of those governed without any monetary benefits, while investment purchases are done with the perceived future benefits in mind.
Private Spending
Laundromats buying washing machines = InvestmentPeople buying houses = InvestmentPeople buying newspapers = ConsumptionPeople buying food = ConsumptionGovernment Spending
Payment for public safety employees = InvestmentBuilding hospitals = InvestmentBuilding roads = InvestmentsBuying military equipment = InvestmentA company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $75 per unit (100 bottles), including fixed costs of $28 per unit. A proposal is offered to purchase small bottles from an outside source for $40 per unit, plus $4 per unit for freight.
a. Prepare a differential analysis dated July 31 to determine whether the company should make _______ or buy __________ the bottles, assuming fixed costs are unaffected by the decision.
b. Determine whether the company should make ___________ or buy ________ the bottles.
Answer:
Part a
Differential analysis to determine whether the company should make or buy the bottles.
Make Buy
Variable manufacturing costs ($75 - $28) $47
Purchase price $40
Freight charges $4
Total Cost $47 $44
Part b
The Company should Buy instead of making the bottles. This is because it costs $3 more to make the bottles than buying them.
Explanation:
The make or buy decision should be done by considering relevant costs. The fixed costs are irrelevant in this decision hence, we have to ignore them.
The alternative course which gives the lowest cost is the one to go for. This will minimize the costs for the entire business and in turn maximizes the profits of the company.
Flounder Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $434,700. The estimated fair values of the assets are land $82,800, building $303,600, and equipment $110,400. At what amounts should each of the three assets be recorded?
Answer:
ok
I thinks it's ok because it's ok you get me
Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates:
Activity Centers Cost Drivers Rate per Cost Driver Unit
Materials handling Pounds of material handled $17 per pound
Quality inspections Number of inspections $210 per inspection
Machine setups Number of machine setups $2,600 per setup
Running machines Number of machine-hours $22.00 per hour
Direct materials costs were $300,000 and direct labor costs were $150,000 during July, when the Fabrication Department handled 3,900 pounds of materials, made 790 inspections, had 50 setups, and ran the machines for 16,000 hours.
Required:
Use T-accounts to show the flow of materials, labor and overhead costs from the tour overhead activity centers through Work in Process Inventory and out to Finished Goods Inventory.
Answer:
Southwest Components
T-accounts:
Raw materials Inventory
Date Accounts Titles Debit Credit
July 31 Cash $300,000
July 31 Work in Process $300,000
Wages & Salaries Account
Date Accounts Titles Debit Credit
July 31 Cash $150,000
July 31 Work in Process $150,000
Manufacturing Overhead
Date Accounts Titles Debit Credit
July 31 Cash $714,200
July 31 Work in Process $714,200
Work in Process Inventory
Date Accounts Titles Debit Credit
July 31 Raw materials $300,000
July 31 Wages & Salaries 150,000
July 31 Overhead 714,200
July 31 Finished Goods Inventory $1,164,000
Finished Goods Inventory
Date Accounts Titles Debit Credit
July 31 Work in Process $1,164,000
Explanation:
a) Data and Calculations:
Activity Centers Cost Drivers Rate per Cost Driver Unit
Materials handling Pounds of material handled $17 per pound
Quality inspections Number of inspections $210 per inspection
Machine setups Number of machine setups $2,600 per setup
Running machines Number of machine-hours $22.00 per hour
Direct materials costs = $300,000
Direct labor costs = $150,000
Pounds of materials = 3,900
Inspections = 790
Setups = 50
Machine usage = 16,000 hours
b) Manufacturing Overhead costs, based on ABC:
Items Per unit cost Units Total cost
Materials handling $17 per pound 3,900 $66,300
Quality inspections $210 per inspection 790 165,900
Machine setups $2,600 per setup 50 130,000
Running machines $22.00 per hour 16,000 352,000
Total manufacturing overhead costs $714,200
b) It is assumed that there are no beginning and ending inventories.
Radon Corporation manufactured 37,500 units during March. The following fixed overhead data pertain to March: Actual Static Budget Production 37,500 units 34,000 units Machine-hours 10,375 hours 10,200 hours Fixed overhead costs for March $213,200 $204,000 What is the fixed overhead production-volume variance?
Answer:
$21,000 Unfavorable
Explanation:
First, we need to calculate fixed overhead absorption rate.
Fixed overhead absorption rate = Fixed overhead costs for March(Static budget) ÷ Production(Static budget)
= $204,000 ÷ $34,000
= $6 per unit
Fixed overhead production volume variance
= Amount actually applied - Amount budgeted
= ($6 × 37,500) - $204,000
= $225,000 - $204,000
= $21,000 Unfavorable
John Smith, a U.S. based businessman, paid the equivalent of $20 to an official of the country of Murundi to expedite the overnight delivery of critical documents. When questioned, John Smith claimed this was not a bribe. The $20 is an example of_______
a. a bribe.
b. an under-the-table payment.
c. a violation of the Foreign corrupt practices act.
d. a grease payment.
e. an inappropriate payment.
Required information Exercise 6-9A Record transactions using a perpetual system (LO6-5) Skip to question [The following information applies to the questions displayed below.] Littleton Books has the following transactions during May.
May 2 Purchases books on account from Readers Wholesale for $3,300, terms 1/10, n/30.
May 3 Pays cash for freight costs of $200 on books purchased from Readers.
May 5 Returns books with a cost of $400 to Readers because part of the order is incorrect.
May 10 Pays the full amount due to Readers.
May 30 Sells all books purchased on May 2 (less those returned on May 5) for $4,000 on account. Exercise 6-9A
Required: 1. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Littleton Books
Journal Entries:
May 2 Debit Inventory $3,300
Credit Accounts Payable (Readers Wholesale) $3,300
To record the purchase of books on account, terms, 1/10, n/30.
May 3 Debit Freight-in $200
Credit Cash Account $200
To record the payment of freight costs for books purchased from Readers.
May 5 Debit Accounts Payable (Readers Wholesale) $400
Credit Inventory $400
To record the return of books.
May 10 Debit Accounts Payable (Readers Wholesale) $2,900
Credit Cash Discount Received $29
Credit Cash Account $2,871
To record the settlement of account.
May 30 Debit Accounts Receivable $4,000
Credit Sales Revenue $4,000
To record the sale of books on account.
May 30 Debit Cost of goods sold $2,900
Credit Inventory $2,900
To record the cost of goods sold.
Explanation:
The journal entries in Littleton Books' accounting records show the accounts to be debited and credited as they occur on a daily basis.
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. Blank 1. Fill in the blank, read surrounding text. -12.38 % is the percentage change in the price of this bond if the yield to maturity rises to 6% from the current yield to maturity of 4.5%?
Answer:
The answer is "12.38 %".
Explanation:
Please find the complete question in the attached file.
Price of face [tex]= \$ \ 1,000[/tex]
Yearly Coupon Rate [tex]= 5 \%[/tex]
Yearly Coupon [tex]= \$ \ 1,000 \times 5 \%[/tex]
[tex]= \$ \ 50[/tex]
Maturity time [tex]= 12 \ years[/tex]
Bond yield [tex]= 4.5 \%[/tex]
Price [tex]= \$ \ 50 \times PVIFA(4.50 \%, 12) + \$ \ 1,000 \times PVIF(4.50 \%, 12)[/tex]
[tex]= \$ \ 50 \times \frac{(1-( \frac{1}{1.045})^{12})}{0.045} + \frac{1,000}{1.045^{12}}\\\\= \$ \ 1,045.59[/tex]
Returns shift to [tex]6 \%[/tex]
Price [tex]= \$ 50 \times PVIFA(6 \%, 12) + \$ 1,000 \times PVIF(6 \%, 12)[/tex]
[tex]= \$ 50 \times \frac{(1-(\frac{1}{1.06})^{12})}{0.06} + \frac{1,000}{1.06^{12}}\\\\= \$ \ 916.16[/tex]
Shift in prices:
[tex]= \frac{(\$ \ 916.16 - \$ \ 1,045.59)}{\$ \ 1,045.59} \\\\ = -12.38 \%[/tex]OR [tex]=12.38 \%[/tex]
10. The strategy that will not help reduce selection bias is: a. development of an explicit case definition b. the use of incentives to encourage high participation c. a standardized protocol for structured interviews d. enrollment of all cases in a defined time and region
Answer:
c. a standardized protocol for structured interviews
Explanation:
The strategy that will help reduce selection bias are:
a. development of an explicit case definition
b. the use of incentives to encourage high participation
c. enrollment of all cases in a defined time and region
Hence, the strategy that will not help reduce selection bias is a standardized protocol for structured interviews.
Christine and Doug are married. In 2014, Christine earns a salary of $250,000 and Doug earns a salary of $50,000. They have no other income and work for the same employers for all of 2014. How much Medicare surtax for high-income taxpayers will Christine and Doug have to pay with their 2014 income tax return?
A. $450 B. $900 C. $2,700 D. None
Answer:
A. $450
Explanation:
In 2014, the Medicare surtax for high-income taxpayers started when married couples filing jointly earned over $250,000. in this case, Christine and Doug made $300,000, so the surtax = ($300,000 - $250,000) x 0.9% = $450
The Medicare surtax income threshold has not been adjusted to inflation and remains at the same level for 2020.
Total medicare contributions for high income taxpayers = 1.45% + 0.9% = 2.35%
Which statement best compares these two loans?
Loan A
Loan B
O The annual percentage rate for loan A is higher
than the rate for loan B
Loan
amount
$15,000
$10,000
O The interest for loans A and B will cost the borrower
the same amount over time.
APR
17%
19%
O The interest is about half the principal for A and
almost equal to the principal for B.
The total payment for A is higher than for B, even
though the principal is actually lower
Loan
repayment
term
5 years
5 years
Total
interest
paid
$7,367.32
$9,857.02
) Intro
Done
Based on the given information, it seems that Loan A has a lower principal amount ($15,000) compared to Loan B ($10,000). However, Loan A has a higher annual percentage rate (APR) of 17% compared to Loan B's 19% APR.
What are the basis of Loan comparison ?This means that over the course of the loan term, the borrower will end up paying more interest for Loan B, making the total payment for Loan B higher than Loan A.
In terms of the interest, it appears that for Loan A, the interest is about half the principal amount, whereas for Loan B, the interest is almost equal to the principal amount. This indicates that Loan B may be more expensive in terms of interest costs.
Despite Loan A having a lower principal amount, the total interest paid for Loan A is $7,367.32, which is lower than the total interest of $9,857.02 for Loan B. This suggests that Loan A may be a better option for the borrower, as it would result in lower overall costs over the loan term.
Overall, the comparison between Loan A and Loan B highlights the importance of considering both the interest rate and the principal amount when evaluating loan options.
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QUESTION 15
Which grouping represents all non profit organizations?
United Way, Red Cross NAACP
Caesars, Bally, Borgota and Boys & Girls Clubs
Nike, Nordstrom, Kohls and Kelloggs
Feed America, Dress for Success, American Civil Liberties Union and McDonalds
Answer:
United Way, Red Cross, NAACP
Explanation:
A nonprofit organization is an organization that aims to bring collective, public, or social benefits, unlike a business that aims to earn a profit for its owners. Examples of nonprofit organizations are United Way, Red Cross, and NAACP.
United Way is a nonprofit organization based in Virginia that works with almost 1,200 offices throughout the US in a coalition of charitable organizations to pool efforts in fundraising and support.
The Red Cross is a nonprofit organization that was founded to protect human life and health, ensure respect for all human beings, and prevent and alleviate human suffering.
NAACP (The National Association for the Advancement of Colored People) is a nonprofit civil rights organization in the United States, formed in 1909 to fight for justice for African Americans.
A company had inventory on July 1 of 5 units at a cost of $16 each. On July 2, they purchased 9 units at $28 each. On July 6 they purchased 5 units at $25 each. On July 8, 8 units were sold for $58 each. Using the LIFO periodic inventory method, what was the value of the inventory on July 8 after the sale?
Answer:
$248
Explanation:
The LIFO inventory method implies that the inventory that was purchased last would be the first to be sold.
Here, we would compute the inventory units as seen below;
= 5 units + 9 units + 5 units - 8 units
= 11 units
Now, the value of inventory is;
= 5 units × $16 + 6 units × $28
= $80 + $168
= $248.
The 6 units come from
= 11 units - 5 units
= 6 units.
Therefore, the value of inventory is $248.
Sienna Company uses the FIFO cost flow assumption. Sienna has inventory with a selling price of $100, packaging costs of $5, and transportation costs of $10. Sienna's normal profit margin is $20. However, due to limited supply of the product from the manufacturer, it would cost Sienna $80 to replace the inventory. What amount should be used as the market value?a. $ 65b. $ 80c. $ 85d. $ 100
Answer: $85
Explanation:
The following information can be gotten from the question:
Selling price = $100
Less: Packaging cost = $5
Less: Transportation cost = $10
Ceiling price = $100 - $5 - $10 = $85
Net profit = $20
Floor price = $85 - $20 = $65
In this scenario, the replacement cost of the inventory is higher than the floor price of $65, therefore the market value should be $85.
When people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring is called a _____________________ .a. riskb. hazard riskc. moral hazardd. moral risk
Answer:
C. moral hazard
Explanation:
moral hazard in can be explained as an hazard that occur when there are more exposure to hazards by entity simply because he/she doesn't responsible for the cost of the exposed risk.
It should be noted that moral hazard occur when people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring .
Luther Industries has no debt, a total equity capitalization of $20 billion, and a beta of 1.8. Included in Luther's assets are $4 billion in cash and risk-free securities. What is Luther's enterprise value?
Answer:
2400000000
Explanation:
Luther's enterprise value will be $16 billion.
The following information can be depicted from the question given:
Total equity capitalization = $20 billionBeta = 1.8It should be noted that an enterprise value is the difference between the market value and cash. Therefore, the enterprise value will be:
= $20 billion - $4 billion
= $16 billion.
In conclusion, Luther's enterprise value will be $16 billion.
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Ben and Mildred's Stables used two different independent variables (trainer hours and number of? horses) in two different equations to evaluate the cost of training horses. The most recent results of the two regressions are as follows:
Trainer's hours: Variable Coefficient Standard Error t-Value Constant $1,005.45 $217.52 4.61 Independent Variable $22.54 $3.23 7.40 r2 = 0.56 Number of horses: Variable Coefficient Standard Error t-Value Constant $5,240.20 $1,180.32 4.44 Independent Variable $22.54 $3.23 4.75 r2= 0.63
What is the estimated total cost for the coming year if 14,700 trainer hours are incurred and the stable has 310 horses to be trained, based upon the best cost driver?
A. $13,995,671.20
B. $7,992.85
C. $332,343.45
D. $300,276.50
Answer:
the estimated total cost for the coming year is $12,227.60
Explanation:
The computation of the estimated total cost is shown below:
y
= Constant coefficient + independent variable coefficient × number of horses
= $5,240.20 + $22.54 × 310 horses
= $5,240.20 + $6,987.40
= $12,227.60
This is the answer but not the same is to be given in the options
hence, the estimated total cost for the coming year is $12,227.60
Which of these is an important factor in the paid search auction system?
AHow famous your brand name is
BHow cool your logo is
CHow long your business has been around
DHow relevant your ads are
Answer:
DHow relevant your ads are
Thank you and please rate me as brainliest as it will help me to level up
How relevant your ads are is an important factor in the paid search auction system. Hence, option D is correct.
What is auction system?An auction is a method of purchasing goods or services by putting them up for bids, allowing people to enter bids, and selling to the highest bidder. As the bidders compete with one another, each bid is higher than the one before it.
Animals can be bought and sold at livestock markets, artwork can be bid on in an auction room at Sotheby's or Christie's, and cars can be bought and sold at auto auctions. On the well-known online marketplace eBay, online auctions are regularly held.
The most common kind of auction is probably the open ascending price auction, which has been used historically.
Thus, option D is correct.
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Luther Industries has 25 million shares outstanding trading at $18 per share. In addition, Luther has $150 million in outstanding debt. Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 40%. Luther's unlevered cost of capital is closest to:_______A) 11.5%B) 10.8%C) 9.8%D) 13.0%
Answer:
B. 10.8%
Explanation:
To get the Market value of equity = 25m x $18 = $450 million
The Market value of debt is given to be = $150 million
To get the weight of equity= 450/600
To get the weight of debt = 150/600
we have Ke as cost of equity= 13%
Such that after tax cost of debt = 7%(1-0.40) = 4.2%
Then the Weighted average cost of capital = We(Ke) + Wd(Kd)
= 450/600 x 13% + 150/600 x 4.2%
This gives us
= 9.75% + 1.05%
Therefore the answer is
= 10.80%
So the option B is correct
Luther's unlevered cost of capital is closest to 10.8%. Therefore, correct response here is option B.
What is the term cost of capital about?
A cost of capital refers to as a return that a company needs to earn in order to achieve the cost of capital of particular project.
Solution:
To get the Market value of equity = 25m x $18 = $450 million
The Market value of debt is given to be = $150 million
To get the weight of equity= 450/600
To get the weight of debt = 150/600
Ke as cost of equity= 13%
Such that after tax cost of debt = 7%(1-0.40) = 4.2%
Then, the Weighted average cost of capital = We(Ke) + Wd(Kd)
Weighted average cost of capital= 450/600 x 13% + 150/600 x 4.2%
Weighted average cost of capital= 9.75% + 1.05%
Weighted average cost of capital=10.80%
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estimated cost: a. managers use to make decisions about the future b. find a right price c. is not useful for
Answer:
managers use to make decisions about the future
Explanation:
Estimated cost is the cost that is projected to be incurred by a business when undertaking a project, program, or operation.
It comprises of the list of expenses that will be spent on an activity in the future.
Therefore it is used by managers to decide on the best activity to undertake in the future.
Usually the activity that has the lowest cost is balanced against the required quality.
Which of the following is a type of liability?
A. A revenue stream
B. A liquid asset
C. Accounts payable
D. Accounts receivable
Answer:
c
Explanation: