the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? WACC- The weighted average cost of capital is the rate (percentage) that a company has to pay to its creditors and shareholders to finance assets. It is the “cost” of their worth. Companies raise money from many different types of securities and loans and the various required returns are what make up the cost of capital. WACC is used to decide if an investment is
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Jenine Teixeira ACFI 406 9/24/12 Assignment chapter 19 Q: 1‚ 2‚ 11‚ 15 1. Dickison orders one thousand widgets at $5 per widget from International Widget to be delivered within sixty days. After the contract is consummated and signed‚ Dickison orally requests that International deliver the widgets within thirty days rather than sixty days. International agrees. Is the contractual modification binding? A- Both parties are merchants‚ the change of delivery date would affect the
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Solutions to Chapter 12 The Cost of Capital 1. The yield to maturity for the bonds (since maturity is now 19 years) is the interest rate (r) that is the solution to the following equation: [$80 annuity factor(r‚ 19 years)] + [$1‚000/(1 + r)19] = $1‚050 Using a financial calculator‚ enter: n = 19‚ FV = 1000‚ PV = (-)1050‚ PMT = 90‚ and then compute i = 7.50% Therefore‚ the after-tax cost of debt is: 7.50% (1 – 0.35) = 4.88% 2. r = DIV/P0 = $4/$40 = 0.10 = 10% 3. = [0.3 7.50% (1
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80000 | Cost of oxygen etc. | 30000 | Diagnostic Services | 50000 | Medicines Supplied | 200000 | Depreciation | 38500 | Insurance | 15000 | Power‚ Fuel & Water | 20000 | The profit expected is 30% on cost. 1) Calculate the price per patient day. 2) Calculate P/L per patient day. Solution: No of Patient days is as below: 30 beds * 150 days = 4500 Patient days 10 beds * 50 days = 500 Patient days Total patient days = 5000 Patient days Operating Cost Sheet
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What is included in the cost basis of a long- lived asset? Explain for a least two types of such assets. Add the original price of your investment and any transaction costs. For example‚ if you buy 100 shares of stock at $10 per share and pay a $20 broker’s commission‚ your purchase expense totals $1‚020. Disregard dividends or other income you receive as cash while you own the investment. Dividends or interest are classified (and taxed) by the Internal Revenue Service as ordinary income and
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Cost of Production Fixed costs are those that do not vary with output and typically include rents‚ insurance‚ depreciation‚ set-up costs‚ and normal profit. They are also called overheads. Variable costs are costs that do vary with output‚ and they are also called direct costs. Examples of typical variable costs include fuel‚ raw materials‚ and some labour costs. An example Production costs Consider the following hypothetical example of a boat building firm. The total fixed costs‚ TFC‚ include
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fixed costs‚ semi-fixed costs‚ and variable costs. Fixed costs are those which do not change with the level of activity within the relevant range. These costs will incur even if no units are produced. For example rent expense‚ straight-line depreciation expense‚ etc. Fixed costs are those which do not change with the level of activity within the relevant range. These costs will incur even if no units are produced. For example rent expense‚ straight-line depreciation expense‚ etc. Mixed costs or semi-variable
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Cost Sheet Format Particulars Amt (Rs.) Amt (Rs.) Opening Stock Of Raw Materials xxx Add: Purchase Of Raw Materials xxx Purchase Expenses xxx Less: Closing Stock Of Raw Materials xxx Defective Materials Returned xxx I. Raw material Consumed xxx II. Add: Direct Labor xxx Factory Wages‚ Productive Wages xxx Less: Abnormal Idle Time xxx III. Add: Direct Expenses Excise Duty xxx Royalty paid on production Basis xxx Hire Charges on Special plant
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A single member of a company wishes to challenge the decisions of the majority. Can he succeed? 8. What new provisions have been made for the protection of interests of debenture holders? 9. Write a short note on Consumer Protection Councils. 10. Describe the powers of SEBI relating to the working of the depository system. Corporate Finance Mgmt 1. What are the advantages and disadvantages of changing the company organization from a sole proprietorship to an LLC? 2. What are the advantages and
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U.S. Prison Costs After reading the essay‚ “A Homemade Education‚” an autobiography of Malcolm X‚ I became quite curious about how many dollars America spends toward the prison system and how it affects our society. The autobiography itself covers how Malcolm X gained a homemade education simply by reading books while serving time in prison. He claimed‚ “I don’t think anybody ever got more out of going to prison than I did…prison enabled me to study far more intensively…sometimes as much
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