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nicolemillan20
18.12.2019 •
Business
Action inc. has $80 million in debt and 60% of its capital structure consists of common equity. the firm has no preferred stock. the firm’s bonds have a coupon rate of 9% and ytm of 8.5%, and the firm is subject to a 30% corporate tax rate. the firm has common stock with a beta of 1.25. the risk free rate on treasury bills is 4% and the expected market risk premium is 10%. what is the minimum after-tax rate of return that action must earn on its investments?
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Ответ:
Explanation:
1. Calculate the efficiency variance for variable overhead setup costs.
This will be calculated as:
= Standard Hours - Actual Hours) × Standard rate
= (15000/225 × 5.25 - 15000/250 × 5) × 38
= (350 - 300) × 38
= 50 × 38
= 1900 Favourable
2) Calculate the rate variance for variable overhead setup costs.
This will be:
= Standard rate- Actual rate) × Actual Hour
= (38-40) × (15000/250 × 5)
= -2 × 300
= -600 Unfavourable
3) Calculate the flexible-budget spending variance for variable overhead setup costs.
This will be the difference between the standard cost and the actual cost. This will be:
= (15000/225×5.25 ×38) - (15000/250×5 ×40)
= 13300 - 12000
= 1300 Favourable
4) Calculate the spending variance for fixed setup overhead costs.
what formular did you use.
This will be:
= Standard Cost - Actual Cost
= 9975-12000
= -2025 Unfavorable