American exploration, inc., a natural gas producer, is trying to decide whether to revise its target capital structure. currently it targets a 50-50 mix of debt and equity, but it is considering a target capital structure with 70% debt. american exploration currently has 6% after-tax cost of debt and a 12% cost of common stock. the company does not have any preferred stock outstanding.

a. what is american exploration's current wacc?
b. assuming that its cost of debt and equity remain unchanged, what will be american exploration's wacc under the revised target capital structure?
c. do you think shareholders are affected by the increase in debt to 70%? if so, how are they affected? are the common stock claims riskier now?
d. suppose that in response to the increase in debt, american exploration's shareholders increase their required return so that cost of common equity is 16%. what will its new wacc be in this case?
e. what does your answer in part d suggest about the tradeoff between financing with debt versus equity?

Exercise 15-7 crawford corporation incurred the following transactions. 1. purchased raw materials on account $53,000. 2. raw materials of $45,200 were requisitioned to the factory. an analysis of the materials requisition slips indicated that $9,400 was classified as indirect materials. 3. factory labor costs incurred were $65,400, of which $50,200 pertained to factory wages payable and $15,200 pertained to employer payroll taxes payable. 4. time tickets indicated that $55,000 was direct labor and $10,400 was indirect labor. 5. manufacturing overhead costs incurred on account were $81,700. 6. depreciation on the company’s office building was $8,100. 7. manufacturing overhead was applied at the rate of 160% of direct labor cost. 8. goods costing $89,400 were completed and transferred to finished goods. 9. finished goods costing $76,000 to manufacture were sold on account for $105,100. journalize the transactions. (credit account titles are automatically indented when amount is entered. do not indent manually.) no. account titles and explanation debit credit (1) (2) (3) (4) (5) (6) (7) (8) (9) (to record the sale) (to record the cost of the sale) click if you would like to show work for this question: open show work

Dan wants to start a supermarket in his hometown, and wants to get into the business only after finding out about the market and how successful his business might be. the best way for dan to gain knowledge is to:

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion, (2) investment = $40 billion, (3) government purchases = $90 billion, and (4) net export = $25 billion. if the full-employment level of gdp for this economy is $600 billion, then what combination of actions would be most consistent with closing the gdp gap here?