Answer:
<em>WACC 10.07765%</em>
Explanation:
We solve for the cost of debt by solving for the discount rate which makes the future coupon payment and maturity of the bond equal to 1,020
This is solved using excel or a financial calculator
C 32.50
time 34
<em>rate 0.03153274</em>
PV $672.0015
Maturity 1,000.00
time 34.00
<em> rate 0.03153274</em>
PV 348.00
PV c $672.0015
PV m $347.9985
Total $1,020.0000
<u>annual cost of debt:</u>
0.031532 x 2 = 0.063064 = 6.31%
<u>debt outstanding:</u>
5,000 bonds x $ 1,000 x 102/100 = 5,100,000
<u>equity</u>:
105,000 shares x $59 each = 6,195,000
For the equity we solve using CAMP
risk free = 0.05
market rate = 0.09
premium market = (market rate - risk free) 0.085
beta(non diversifiable risk) = 1.17
<u>Ke 0.14945</u>
Now we solve for the WACC
D 5,100,000
E 6,195,000
V 11,295,000
Equity weight 0.5485
Debt Weight 0.4515
Ke 0.14945
Kd 0.0631
t 0.34
<em>WACC 10.07765%</em>
Answer:
The difference between two WACC is 1.2%.
Explanation:
As we know that
WACC = Ke * Ve / (Ve + Vd (1-Tax)) + Kd * Vd*(1-tax) / (Ve + Vd*(1-Tax))
Using the Book Value Method:
WACC = 14% *$65 / ($65m + $45m (1-40%))
+ 6% *$45m*(1-.4) / ($65m + $45m (1-40%))
WACC = 10% + 1.8% = 11.8%
<u>Using the market value method:</u>
Market Value of Common Stock = Common Shares * Market value per share
Market Value of Common Stock = 10 million * $22.5 per share = $225m
WACC = 14% *$225 / ($225m + $50m (1-40%))
+ 6% *$50m*(1-.4) / ($225m + $50m (1-40%))
WACC = 12.35% + 0.7% = 13%
The difference between two WACC is 1.2%.
Answer:
E) It has limited capacity.
Explanation:
Our brain's workbench memory stores and encodes information so that it can be stored as long-term memory, and eventually it can be retrieved and used in the future. Since it is something like an intermediate stage, it has limited capacity. The events that are held there and not stored in our long-term memory will be discarded.
Answer:
Dr Office supplies expense $15,000
Cr Office supplies $15,000
Explanation:
Given the above information, we can compute the proper adjusting entry as;
= ( Transfer $12,000 + $8,000 - $5,000)
= $15,000 from office supplies expense
Therefore, the proper adjusting entry is;
Dr Office supplies expense $15,000
Cr Office supply $15,000
The answer is (D). There are many factors in the highway traffic system such as the environment, Highways, and Drivers but, Car washes are not a part of the system
