Response:
The correct choice is option "D": It is likely that the fees imposed by a bank will exceed the interest offered on a teenager’s savings account during their initial saving period.
Clarification:
Financial institutions often impose elevated fees on savings accounts for teenagers since they lack a credit history. This can make them appear to be riskier financially, particularly concerning overdrafts. Consequently, banks generally offer lower interest rates on these accounts along with certain limitations that one should consider before selecting a bank for account opening.
Answer:
Part A:
Required workers=20.833≅21
Part B:
Each worker's productivity=2.0833 parts/hour
Part C:
Multifactor productivity=0.0832 Parts/$
Explanation:
Part A:
Total parts produced =100,000
Workers required= Total parts/(Parts per hour* hours per shift*Total Shifts)
Workers required=20.833≅21
Part B:
Individual worker productivity:
Part C:
Total material costs= $10*100,000=$1,000,000
Capital cost= $100,000
Total labor expenses=
Total labor expenses=$100,800
Multifactor productivity=Total Parts/(Total material costs+capital costs+Total labor expenses)
Answer:
Option (D) is the right choice.
Explanation:
According to the Modigliani-Miller proposition, the cost of equity will adjust in a way to accommodate its debt obligations.
Cost of equity:
= WACC for an all-equity firm + (WACC for an all-equity firm - Cost of debt ) × (Debt-to-equity ratio)
Initially, when no debt was present,[ [TAG_20]]
WACC = cost of equity = 10%
The levered cost of equity:
= 10% + ( 10% - 6%) × 0.2
= 10.8%
Thus, Taggart's levered cost of equity would be approximately 11%.
