SIROM Scientific Solutions has $12 million of outstanding equity and $4 million of bank debt. The bank debt costs 4% per year. The estimated equity beta is 1
If the market risk premium is 8% and the risk-free rate is 4%, compute the weighted average cost of capital if the firm's tax rate is 30%.
A) 8.73%
B) 9.22%
C) 9.70%
D) 10.67%
Answer: C
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Benefits of business incubators include ________.
a. access to shared services b. high security c. venture capital d. free rent e. guaranteed profitability
Barrier Corporation is performing a sensitivity analysis on one of its product. The product currently sells for $75 per unit, with variable cost of $46 per unit and fixed costs of $100,000. Barrier currently sells 80,000 units of this product. Barrier is considering reducing its price by 10%. If prices decrease, then it is expected that units sold will increase by 8%. Calculate the change in operating income.
A) $248,500 increase B) $462,400 decrease C) $248,500 decrease D) $462,400 increase