Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 25%. What will be the WACC for this project

Flotation costs increase the cost of equity:

since Kuhn only receives $0.92 per every dollar of common stocks, cost of equity increases by $0.08 / $0.92 = 8.7%

cost of equity without issuing additional common stocks:

$33.35 = $2.78 / (Re - 8.7%)

Re - 8.7% = $2.78 / $33.35 = 8.34%

Re = 8.34% + 8.7% = 17.04%

since the project is going to be financed solely by issuing common stocks, its WACC = 17.04% x (1 + 8.7%) = 18.52%

if the company also issued debt or preferred stocks in order to finance this project, the project's WACC would probably decrease. Generally, equity is much more expensive than debt. That means that a project that is solely financed through equity will have a high WACC:

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answer/// there is an inverse relationship between price and quantity demanded;