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Snowcat [4.5K]
1 year ago
5

What is the weighted average cost of capital (WACC) for ABC Limited which has the following capital structure? $5m of equity wit

h a cost of equity of 15%; $2m of mezzanine finance with a cost of 9.5%; $1m of senior debt with a cost of debt of 7%.
Business
1 answer:
katrin2010 [14]1 year ago
7 0

The weighted average cost of capital (WACC) for ABC Limited is 12.63%

The weighted average cost of capital(WACC) of a firm is the average cost of finance incurred by the firm on all its sources of finance.

It is determined as the sum of the cost of each source of finance multiplied by their respective weights in the firm's capital structure.

By weights, I mean the percentage of funding each source contributes to the total finance available at the firm's disposal.

WACC=(weight of equity*cost of equity)+(weight of mezzanine finance*cost of mezzanine finance)+(weight of debt*cost of debt)

weight of equity=equity finance/total finance

cost of equity=15%

weight of mezzanine finance=mezzanine finance/total finance

cost of mezzanine finance=9.5%

weight of debt of finance=debt finance/total finance

total finance=$5m+$2m+$1m

total finance=$8m

WACC=($5/$8*15%)+($2/$8*9.5%)+($1/$8*7%)

WACC=12.63%

Find further guidance on weighted average cost of capital's computation in the link below:

brainly.com/question/25566972

#SPJ1

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irinina [24]

Answer:

competitive disadvantage

Explanation:

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I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

7 0
3 years ago
Consider Emily's balance statement:
notsponge [240]

Answer:

see below

Explanation:

A balance sheet is prepared following the accounting principles of assets equal to liabilities plus equity. Assets are left side while equity and liabilities on the other.

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In this balance sheet,  Emily has confused assets and liabilities.

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8 0
2 years ago
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lbvjy [14]

Answer:

Ending inventory= $5,592.45

Explanation:

Giving the following information:

Mar. 1: Beginning inventory= 1,090 units at $7.25

Mar. 10: Purchase: 510 units at $7.75

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Mar. 23: Purchase: 510 units at $9.05

First, we need to calculate the number of units in ending inventory:

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6 0
3 years ago
How is the role of government determined in the american free enterprise system?
Whitepunk [10]

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4 0
3 years ago
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The adjusted balance in the Accumulated Depreciation account at the end of 2019 is <u>$14,000</u>.

<u> Explanation</u>:

<em><u>Given</u></em>:

Cost of van= $32,000

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Straight-line Depreciation Rate= 1/8

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By applying the values,

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