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Sindrei [870]
3 years ago
13

A company has a cost of debt (before tax) of 5.5% and a cost of equity of 12.8%. In addition, the company has a target capital s

tructure of 30% debt and 70% equity, and a marginal income tax rate of 30%. Given this information, what is the WACC for this company
Business
1 answer:
alexira [117]3 years ago
4 0

Answer:

10.12%

Explanation:

Wacc = (D / V)rd (1 - t) + (E / V) re

(D/V) = 0.3

Rd = before tax cost of debt = 5.5%

T = tax rate = 30%

(E / V) = 0.7

Re = marginal cost of equity = 12.8%

= (0.3 x 5.5% × 0.7) + (0.7 x 12.8%) = 1.155% + 8.96% = 10.12%

I hope my answer helps you

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Which of these is a reason that citizens should vote?
ale4655 [162]

Answer:

I would say the answer is B

5 0
3 years ago
1. Based on the following data, would you recommend buying or renting? (LO 7.1) Rental Costs Buying Costs Annual rent, $7,380 An
UNO [17]

Answer:

1

Explanation:

a. Let calculate the cost to rent

Buying Costs equal $7,380

Rent equal $9,800

Mortgage payments equal 145 Insurance equal $2,830

Since taxes, insurance, maintenance 39 Interest lost on security deposit and 270 Interest lost on down payment, with a closing costs of -225

Growth in equity equal 1,700

Annual appreciation equal 2,681

Tax savings for mortgage interest of 498

Tax savings for property taxes

$ 7,564

Total rental costs

$ 7,796 Total buying costs

Interest lost on security deposit = $650 × 0.06 = $39

Interest lost on down payment and closing cost = $4,500 × 0.06 = $270

Tax savings for mortgage interest = $9,575 × 0.28 = $2,681

Tax savings for property taxes = $1,780 × 0.28 = $498

(b) cost of renting is less than cost of buying, if cost is the only criteria, renting is better.

5 0
3 years ago
The possibility that more than one discount rate can cause the net present value of an investment to equal zero is referred to a
ddd [48]

Answer:

Multiple rates of return

Explanation:

The multiple rates of return occur when the company wants to make the net present value to zero that means the initial investment should be equal to the present value of cash inflows after considering the discounting factor and this situation occurs when the internal rate of return has the negative cash flows that followed the positive cash flows

hence, the third option is correct

6 0
3 years ago
Explain what happens to supply, price, and quantity when the following condition occur: a) A new technology is developed to pick
Julli [10]

Answer:

Consider the following explanation

Explanation:

A) Production of peaches will increase, Thus supply will increase and price will reduce and quantity of peaches will increase

B) The price of furniture will fall, The supply of furniture will increase and quantity of furniture will increase

C) The supply of money will increase, The cost of borrowing will go down, The quantity of money loaned from bank increases

D) The supply of rubber will increase, The price will increase, The quantity demanded will rapidly decrease.

E) Supply will remain the same, The price will increase and quantity demanded will decrease.

5 0
2 years ago
Cybill's manager wanted her to design the new ad campaign for the firm's new product. She was given all the necessary resources
Oksana_A [137]

Answer:

Responsibilty

Explanation:

Responsibility is the act of accepting the full control of a given activity and also taking ownership of the consequences of the outcome of the activity.

It is basically being accountable.

When Cybil's manager asks her to design the new ad campaign for the firm's new product, she was given all the necessary resources to complete the task.

Her awareness that she is accountable for the outcome of the campaign exemplifies concept of responsibility.

4 0
3 years ago
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