Patricia couldn't believe it. The small piece of undeveloped property adjacent to her restaurant just went up for sale! She'd been waiting for this day for years; she had dreamed of a lovely garden with outdoor customer seating. Given the trend for rustic environments, she could set out her existing dining tables and be ready for outdoor seating immediately. She even had financing available for this purchase. The timing might be tricky though; her location was one of many under the corporate umbrella, and executives had just rolled out more stringent goals for each location. Patricia's location generated a 12% ROI last year and was on track to maintain that level this year. Patricia is evaluated on the following for her location: (1) maintaining or improving ROI and (2) generating positive EVA. The property was listed for $350,000, and she would need to finance all of it. Corporate's tax rate was 24%, its average debt rate was 4%, and its cost of equity was 8%. Currently, corporate's financial position reflected 60% debt and 40% equity financing. The purchase of this land would bump up the debt proportion to 65%. Still, Patricia anticipated additional operating income of $18,900 associated with this new space through year-end. What is the corporate WACC assuming Patricia (1) does not purchase the property and (2) does purchase the property? (Round answers to 1 decimal place, e.g. 15.2\%.) WACC without purchase % WACC with purchase % Current Attempt in Progress Concord Company started as a small business, selling ice cold lemonade at area festivals. As the company grew, it became more decentralized. The lemon-press division went gangbusters, not only providing its lemon concentrate to the lemonade division of the company but also selling its concentrate externally to a variety of businesses. The variable cost to make one gallon of lemon concentrate from the pressing process is $7. If all production costs are considered, the cost is $7,50 per gallon. The current market price for a gallon of this concentrate is $8. (a) Assuming the lemon-press division has enough capacity to meet both internal and external demand for its concentrate. what transfer price range would be likely? Minumum transfer price $ Maximum transfer price $ Patricia couldn't believe it. The small piece of undeveloped property adjacent to her restaurant just went up for sale! She'd been waiting for this day for years; she had dreamed of a lovely garden with outdoor customer seating. Given the trend for rustic environments, she could set out her existing dining tables and be ready for outdoor seating immediately. She even had financing available for this purchase. The timing might be tricky though: her location was one of many under the corporate umbrella, and executives had just rolled out more stringent goals for each location. Patricia's location generated a 12% ROI last year and was on track to maintain that level this year. Patricia is evaluated on the following for her location: (1) maintaining or improving ROI and (2) generating positive EVA. The property was listed for $350,000, and she would need to finance all of it. Corporate's tax rate was 24%, its average debt rate was 4%, and its cost of equity was 8%. Currently, corporate's financial position reflected 60% debt and 40% equity financing. The purchase of this land would bump up the debt proportion to 65%. Still. Patricia anticipated additional operating income of $18,900 associated with this new space through year-end. (a) What is the projected ROI for this land purchase? (Round answer to 3 decimal places, e.g. 0.152.) What is the corporate WACC assuming Patricia (1) does not purchase the property and (2) does purchase the property? (Round answers to 1 decimal place, e.8. 15.2\%.) WACC without purchase WACC with purchase % Patricia couldn't believe it. The small piece of undeveloped property adjacent to her restaurant just went up for sale! She'd been waiting for this day for years; she had dreamed of a lovely garden with outdoor customer seating. Given the trend for rustic environments, she could set out her existing dining tables and be ready for outdoor seating immediately. She even had financing available for this purchase. The timing might be tricky though; her location was one of many under the corporate umbrella, and executives had just rolled out more stringent goals for each location. Patricia's location generated a 12% ROI last year and was on track to maintain that level this year. Patricia is evaluated on the following for her location: (1) maintaining or improving ROI and (2) generating positive EVA. The property was listed for $350,000, and she would need to finance all of it. Corporate's tax rate was 24%, its average debt rate was 4%, and its cost of equity was 8%. Currently, corporate's financial position reflected 60% debt and 40% equity financing. The purchase of this land would bump up the debt proportion to 65%. Still, Patricia anticipated additional operating income of $18,900 associated with this new space through year-end. What is the corporate WACC assuming Patricia (1) does not purchase the property and (2) does purchase the property? (Round answers to 1 decimal place, e.g. 15.2\%.) WACC without purchase % WACC with purchase % Current Attempt in Progress Concord Company started as a small business, selling ice cold lemonade at area festivals. As the company grew, it became more decentralized. The lemon-press division went gangbusters, not only providing its lemon concentrate to the lemonade division of the company but also selling its concentrate externally to a variety of businesses. The variable cost to make one gallon of lemon concentrate from the pressing process is $7. If all production costs are considered, the cost is $7,50 per gallon. The current market price for a gallon of this concentrate is $8. (a) Assuming the lemon-press division has enough capacity to meet both internal and external demand for its concentrate. what transfer price range would be likely? Minumum transfer price $ Maximum transfer price $ Patricia couldn't believe it. The small piece of undeveloped property adjacent to her restaurant just went up for sale! She'd been waiting for this day for years; she had dreamed of a lovely garden with outdoor customer seating. Given the trend for rustic environments, she could set out her existing dining tables and be ready for outdoor seating immediately. She even had financing available for this purchase. The timing might be tricky though: her location was one of many under the corporate umbrella, and executives had just rolled out more stringent goals for each location. Patricia's location generated a 12% ROI last year and was on track to maintain that level this year. Patricia is evaluated on the following for her location: (1) maintaining or improving ROI and (2) generating positive EVA. The property was listed for $350,000, and she would need to finance all of it. Corporate's tax rate was 24%, its average debt rate was 4%, and its cost of equity was 8%. Currently, corporate's financial position reflected 60% debt and 40% equity financing. The purchase of this land would bump up the debt proportion to 65%. Still. Patricia anticipated additional operating income of $18,900 associated with this new space through year-end. (a) What is the projected ROI for this land purchase? (Round answer to 3 decimal places, e.g. 0.152.) What is the corporate WACC assuming Patricia (1) does not purchase the property and (2) does purchase the property? (Round answers to 1 decimal place, e.8. 15.2\%.) WACC without purchase WACC with purchase %