Other sets by this creator
Enter the letter A through H for the principle or assumption in the blank space next to each numbered description that it best reflects.
A. General accounting principle
B. Cost principle
C. Business entity assumption
D. Revenue recognition principle
E. Specific accounting principle F. Matching (expense recognition) principle G. Going-concern assumption
H. Full disclosure principle
_____8. Information is based on actual costs incurred in transactions.
During April, the first production department or a process manufacturing system completed its work on 300,000 units of a product and transferred them to the next department. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion. Compute the number or equivalent units with respect to both materials used and conversion used in the first production department for April using the weighted-average method.
Acort Industries has million shares outstanding and a current share price of per share. It also has long-term debt outstanding. This debt is risk free, is four years away from maturity, has annual coupons with a coupon rate of , and has a million face value. The first of the remaining coupon payments will be due in exactly one year. The riskless interest rates for all maturities are constant at . Acort has EBIT of million, which is expected to remain constant each year. New capital expenditures are expected to equal depreciation and equal million per year, while no changes to net working capital are expected in the future. The corporate tax rate is , and Acort is expected to keep its debt-equity ratio constant in the future (by either issuing additional new debt or buying back some debt as time goes on).
a. Based on this information, estimate Acort's WACC.
b. What is Acort's equity cost of capital?