Calculate the WACC for the following data: A company raised $100,000,000. $50,000,000 came from the sale of bonds which have a current yield of 8%. $25,000,000 came from the sale of common stock which has a cost equal to 9%. The final $25,000,000 came from the sale of preferred stock which has a cost equal to 10%. The company's tax rate is 30%.Question 32 options:
A)
7.55%
B)
9.17%
C)
9.00%
D)
8.00%
Answers
Answer:
WACC = 7.55 %
so correct option is A) 7.55%
Explanation:
given data
company raised = $100,000,000
sale of bonds = $50,000,000
current yield = 8%
sale of common stock = $25,000,000
cost equal = 9%
sale of preferred stock =$25,000,000
cost equal = 10%
tax rate = 30%
to find out
WACC
solution
we get here WACC that is express as
WACC = ( Weight of debt × After tax cost of debt) + (Weight of equity × Cost of equity) + (Weight of preferred stock × cost of preferred stock) ..................1
and cost of debt after tax will be
cost of debt after tax = 8% of ( 1 - 30%)
cost of debt after tax = 5.6%
and Weight of debt = = 0.50
and Weight of equity = = 0.25
and Weight of preferred stock = = 0.25
so WACC = ( 0.50 × 0.056 ) + ( 0.25 × 0.09 ) + ( 0.25 × 0.10 )
WACC = 0.0755
WACC = 7.55 %
so correct option is A) 7.55%
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Answers
Answer:
i hope it helps u :)
Explanation:
In any market economy, business plays a huge role. Business is the engine of an economy. Business provides jobs that allow people to make money and goods and services that people can buy with the money they make. ... Most businesses provide people with jobs.
Answer:
Explanation:
In any market economy, business plays a huge role. Business is the engine of an economy. Business provides jobs that allow people to make money and goods and services that people can buy with the money they make. ... Most businesses provide people with jobs
Answers
Answer:
Functional need
Explanation:
Functional need -
It refers to the needs of the human being , which are important for the survival , is referred to as functional need .
These are basic requirements which are important for the day to day activities of the people .
Hence , from the scenario of the question,
Sarah bought a cycle , but as soon as she realized that basket is important for keeping her bag and other item .
Hence, the need of basket is the functional need .
b. False
Answers
Answer: a. True
Explanation:
Marginal Cost as well known is the cost of producing an extra unit of a good. Average Cost on the other hand is the cost of producing all the goods divided by the number of units that are produced.
It therefore stands to reason that if goods are getting more expensive to produce, the Average Cost will rise.
For example, take 2 scenarios.
Scenario 1.
Cost of producing units 1 to 5 is $2 each.
Average Cost = (2 + 2 + 2 + 2 + 2) / 5
= 10/5
Average Cost = $2
Scenario 2
Cost of Producing Units 1 to 5 are;
Unit 1 - $2
Unit 2 - $2
Unit 3 - $2
Unit 4 - $2
Unit 5 - $4
Average cost at unit 5 = (2 + 2 + 2 + 2 + 4)/5
= 12/5
= $2.40
Average Cost has increased by $0.40
Answers
Answer:
Mail and online research.
Explanation:
Since in the given situation, it can be seen that the company does not have much amount to be incurred on the research so the best option is to do online research and mail as the person research and the telephone research becomes expensive as compared to the mail and online research
Therefore the above should be the answer
Resident Value
(Dollars)
Darnell 70
Eleanor 90
Jacques 150
The total benefit of the fireworks display to the town of Bayport is ($ ).
Therefore, fireworks (would/would not) pass the cost-benefit analysis in the town of Bayport.
The mayor of Bayport proposes to decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents.
Who would vote in favor of the fireworks referendum? Check all that apply.
Darnell
Eleanor
Jacques
Answers
Answer:
Thus, option b and c are correct.
Explanation:
Suppose that there are two towns. Each town has three members to put on a fireworks display. The cost of fireworks is $300.
Find the total benefits of the fireworks display to the town of B.
Total benefit = value to Darnell + value to eleanor + value to Jacques
= 70+90+150 =$310
Thus, total benefit of the fireworks display to the town of B is $310.
Since the total benefits to the persons is greater than the total costs, therefore, fireworks would pass the cost- benefits analysis in the town of B.
The mayor of B said to spilt the cost among all the residents. Each of the residents will bear s $100 ($300/3).
Darnell and Eleanor will not vote for this because cost to them is more than the value to them. Remaining Jacques
will vote for this because cost to him is less than the value to him for this.
Thus, Jacques will vote in favor of this.
Thus, option c is correct.
Therefore, vote would not yield the same answer as the cost-benefit analysis.
Find the total benefits of the fireworks display to the town of RH.
Total benefit = value to kyoko + value to Musashi + value to Rina
= 50 +110+ 120 = $280
Thus, total benefit of the fireworks display to the town of RH is $280.
Since the total benefits to the persons is less than the total costs, therefore, fireworks would not pass the cost- benefits analysis in the town of RH.
The mayor of RH said to spilt the cost among all the residents. Each of the residents will bear $100 &$300/3).
Kyoko will not vote for this because cost to them is more than the value to them. Remaining Musashi and Rina will vote for this because cost to him is less than the value to him for this.Thus, Musashi and Rina will vote in favor of this.
Thus, option b and c are correct.
Therefore, vote would not yield the same answer as the cost-benefit analysis.
The following statements are correct about the provision of public goods.
It is hard for the government to decide the appropriate amount of public goods to produce because people have differing preferences regarding such goods. Thus, option b is correct.
Answers
Answer:
If the tax rate is 10% the better option is transaction 1 ($11,100 to 14,220)
IF the tax rate is 30% the better option is transaction 2 ($10,885 to 11,100)
Explanation:
We will compare the after tax cost for transaction two and check if it is better than 11,100 which will be the net cost for transaciton one
We must understad that the tax income deductible transacton provides a tax shield on the tax income, therefore his net effect is lower after considering taxes.
the rate will be think it as a discount to the pruchase price
at 10% income rate:
15,800 x ( 1 - 10% ) = 14,220
at 30% income rate
15,500 x ( 1 - 30% ) = 10,885