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Leviafan [203]
2 years ago
11

Nipigon manufacturing has a cost of debt of 9 %, a cost of equity of 11%, and a cost of preferred stock of 10%. nipigon currentl

y has 120,000 shares of common stock outstanding at a market price of $25 per share. there are 49,000 shares of preferred stock outstanding at a market price of $38 a share. the bond issue has a face value of $950,000 and a market quote of 106. the company’s tax rate is 40%. required: calculate the weighted average cost of capital for nipigon.
Business
1 answer:
Vanyuwa [196]2 years ago
3 0

the weighted average cost of capital for Nipigon is 0.049716

Calculate the weighted average cost of capital for Nipigon

cost of Equity share= 120,000 x $25= $30,00,000

cost of Preference share= 49,000 x $38= $18,62,000

cost of debt= $9,50,000

Total cost = $30,00,000 + $18,62,000 + $9,50,000

                 = $58,12,000

Weightage

Equity= $30,00,000/$58,12,000= 0.516

Preference=  $18,62,000/$58,12,000= 0.320

Debt= $9,50,000/$58,12,000= 0.164

Rates

Equity = 0.11

Preference= 0.10

Debt= 0.09 (1-0.4)= 0.54

weighted average cost

Equity= 0.516 x 0.11 = 0.05676

preference= 0.320 x 0.10= 0.0320

Debt= 0.164 x 0.54= 0.00886

Total weighted average cost= 0.05676+0.0320+0.00886

=0.049716

What is the weighted average cost method?

A weighted average computation accounts for the varying levels of significance of the numbers in a data collection. A specified weight is multiplied by each value in the data set before the final computation is completed when calculating a weighted average.

Learn more about weighted average cost method: brainly.com/question/8543883

#SPJ4

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Answer:

<u>$35</u>

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Note the formula:

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<u>Total Revenue for 2 units of output sold</u>

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<u>The Marginal Revenue=</u>

Change in TR (135-100) / Change in quantity (3-2)

= $35/1

= <u>$35</u>

Therefore, the Marginal Revenue If the firm sells 3 units of output, will be $35.

7 0
3 years ago
AG Inc. made a $85,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales
neonofarm [45]

Answer:

$84,150

Explanation:

Given that

Sale amount = $85,000

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= Sale amount - sale amount  × discount rate given

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= $85,000 - $850

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3 years ago
An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data: Accounts Receivable
Hitman42 [59]

Answer:

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Explanation:

Given that,

Accounts Receivable = $900,000

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Bad debt expense at the end of the period is determined by subtracting the credit balance of allowance for doubtful accounts from the expected amount of uncollectible.

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At the end of the period, the allowance for doubtful accounts has a balance of $56,000 that are to be uncollectible.

The cash realizable value of the accounts receivable at December 31, after adjustment, is determined by simply subtracting the Allowance for doubtful accounts  from the accounts receivable. It is calculated as follows:

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4 0
3 years ago
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miss Akunina [59]

Explanation:

The journal entries are shown below:

1. Cash A/c Dr $14,200

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          To Land $11,360

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2. Cash A/c Dr $18,900

            To Common stock A/c $18,900

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3. Depreciation Expense A/c Dr $15,730

             To Accumulated Depreciation - Buildings A/c $15,730

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4. Salaries expense A/c Dr $8,080

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(Being the salaries expense is paid for cash)

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(Being the equipment is purchased)

6. Cash A/c Dr $1,236

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Answer:

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8 0
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