[jeff]

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Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Qlad]

I have no idea how to do this one…

A inc is looking at a number of capital projects and is trying to determine the appropriate hurdle rate to use to ensure improvement of Shareholder value. The co.s after tax cost of debt capital is 7% and equity finance 12%. If co's current debt to equity ratio is .25 and cost to total capital ratio is .2 what is the minimum hurdle rate expansion Inc will use?

A9.5%

B10.75%

C11.00%

D12.00%

Pls explain the calculation too….what's the formula to find hurdle rate? don't know

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[nsc2014]

I think the answer is 11% to get wacc

7% * debt %+ 12%* equity%

D/E= .25/1=1/4=20%/40%

so, 7*.2+12*.8=11%

AUD 76
FAR 85
BEC 80
REG 82

[nsc2014]

I think the answer is 11% to get wacc

7% * debt %+ 12%* equity%

D/E= .25/1=1/4=20%/40%

so, 7*.2+12*.8=11%

AUD 76
FAR 85
BEC 80
REG 82

[nsc2014]

is that correct?

AUD 76
FAR 85
BEC 80
REG 82

[nsc2014]

is that correct?

AUD 76
FAR 85
BEC 80
REG 82

[Qlad]

don't know ….i don't have answer explanation…some old papers of a buddy…

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Qlad]

don't know ….i don't have answer explanation…some old papers of a buddy…

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[CPAsweetness]

Can someone help me.

Brewster Co. has the following financial information:

Fixed costs $20,000

Variable costs 60%

Sales price $50

What amount of sales is required for Brewster to achieve a 15% return on sales?

S – 0.6S – $20,000 = 0.15S

S – 0.6S – 0.15S = $20,000

0.25 S = $20,000

S = $20,000 ÷ 0.25

S = $80,000

I feel so stupid. How are they getting .25? I have seen other questions like this, and I think it's time I ask. Just can't get it. 🙁

Thanks my BEC buddies!

[CPAsweetness]

Can someone help me.

Brewster Co. has the following financial information:

Fixed costs $20,000

Variable costs 60%

Sales price $50

What amount of sales is required for Brewster to achieve a 15% return on sales?

S – 0.6S – $20,000 = 0.15S

S – 0.6S – 0.15S = $20,000

0.25 S = $20,000

S = $20,000 ÷ 0.25

S = $80,000

I feel so stupid. How are they getting .25? I have seen other questions like this, and I think it's time I ask. Just can't get it. 🙁

Thanks my BEC buddies!

[nsc2014]

@CPAsweetness

S-0.6S-0.15S =S-0.75S =0.25S

AUD 76
FAR 85
BEC 80
REG 82

[nsc2014]

@CPAsweetness

S-0.6S-0.15S =S-0.75S =0.25S

AUD 76
FAR 85
BEC 80
REG 82

[HurricaneDitka]

The first S is considered 1s… so it is 1-.6-.15.

Total sales – VC of sales (which is 60% of sales as stated in question) – 20,000 FC = .15S (which would be a 15% return on 1s).

AUD - 99 (10/18/13)
BEC - ?? (11/22/13)
REG - ?? (01/10/14)
FAR - ?? (sometime spring 2014)

[HurricaneDitka]

The first S is considered 1s… so it is 1-.6-.15.

Total sales – VC of sales (which is 60% of sales as stated in question) – 20,000 FC = .15S (which would be a 15% return on 1s).

AUD - 99 (10/18/13)
BEC - ?? (11/22/13)
REG - ?? (01/10/14)
FAR - ?? (sometime spring 2014)

[nsc2014]

another way is becker formula

(Fixed+ target profit) / CM%= total sales

20,000+ .15S) /( 1-60%)= S

20000=.4S-.15S

S=20000/.25=80000

AUD 76
FAR 85
BEC 80
REG 82

[nsc2014]

another way is becker formula

(Fixed+ target profit) / CM%= total sales

20,000+ .15S) /( 1-60%)= S

20000=.4S-.15S

S=20000/.25=80000

AUD 76
FAR 85
BEC 80
REG 82

[Author]

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