1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
SVEN [57.7K]
3 years ago
11

Long-term debt outstanding: $300,000 Current yield to maturity (rdebt): 8% Number of shares of common stock: 10,000 Price per sh

are: $50 Book value per share: $25 Expected rate of return on stock (requity): 15%
Calculate the company's cost of capital. Ignore taxes.
Business
1 answer:
nadya68 [22]3 years ago
6 0

Answer:

Cost of capital=11.18%

Explanation:

First We will calculate the Equity of firm:

Equity= Number of share* Book value per share

Equity= 10,000* $25

Equity= $250,000

Long-term debt=$300,000

Expected rate of return=15%=0.15

Current yield to maturity (rdebt)=8%=0.08.

Value of firm=Equity+Long-term debt

Value of firm= $250,000+$300,000

Value of firm= $550,000

Formula:

Cost\ of \ Capital=\frac{Equity}{Value\ of\ firm}* Rate\ of\ return+\frac{Debit}{Value\ of\ firm}* yield\ to\ maturity

Cost\ of\ Capital=\frac{\$250,000}{\$550,000}*0.15+\frac{\$300,000}{\$550,000}*0.08\\  Cost\ of\ Capital=0.1118

Cost of capital=11.18%

You might be interested in
Which of the following best describes a project stakeholder
Brilliant_brown [7]
Project Stakeholders can be entities that have an interest in a given project. 
3 0
2 years ago
I am conducting a survey as a project. I need ur help Which one you like 1. Ferrari 2. Lamborghini 3. Mclaren and why?? ( If you
Ne4ueva [31]

Answer:

Explanation:

Compared to the McLaren, the Lamborghini has less power, a heavier engine, and less active aerodynamic designs. This allows the Huracán Performante to be an excellent supercar with extreme sounds, feels, and the excitement of a Lamborghini, but in performance the McLaren is superior.

7 0
3 years ago
A company has the following per unit recorded cost and replacement cost relating to its inventory:Item 1 5 units Cost $50 Market
Kryger [21]

The reported value of this company's ending inventory if LCM is applied to individual items is $870.

<h3>What is reported value?</h3>

The value of any assets or liabilities or any such credentials, which is recorded in the books of official record for the purpose of accounting as per the standards, is known as the reported value.

The computation of the reported value in the given condition will be,

  1. Item 1 – 5 Units x $45= $225;
  2. Item 2 – 7 units x $60= $420;
  3. Item 3 – 9 Units x $25= $225.

The summation of all the reported values will be,

$(225+420+225)= $870.

Hence, the reported value of the inventory of the company is as aforementioned.

Learn more about reported value here:

brainly.com/question/14002494

#SPJ1

3 0
2 years ago
Which of the following statements comparing debit cards to credit cards is TRUE?
djverab [1.8K]
Using a credit card is like borrowing money, while debit cards let you draw directly from your bank account
8 0
2 years ago
Read 2 more answers
Is this counted in the GDP of a country ?The services of a mechanic in fixing the radiator on his own car.
Aleonysh [2.5K]

Answer:

Yes this could be counted as GDP

Explanation:

6 0
2 years ago
Other questions:
  • How does the economy coordinates society's independent economic actors?
    6·2 answers
  • Chico Company paid $560,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the
    12·1 answer
  • The purpose of time management is to ________.
    8·2 answers
  • Angelo owns a bookstore and has been running a Google Shopping campaign for several months. He needs to monitor how different bo
    14·2 answers
  • The consumer sales promotion that involves the use of a brand-name product in a movie, television show, video game, or a commerc
    8·1 answer
  • If the economy booms, RTF, Inc., stock is expected to return 9 percent. If the economy goes into a recessionary period, then RTF
    15·1 answer
  • Sherman Peabody earns a monthly salary of ​$1,500​, which he receives at the beginning of each month. He spends the entire a
    13·1 answer
  • In​ 2007, Newmarket Inc. set as its annual production goal the manufacture of​ 125,000 units. By​June, the economy had declined
    6·1 answer
  • Last month you assumed the position of manager for a large car dealership. The distinguishing feature of this dealership is its
    15·1 answer
  • Dailies is a large retail chain in New Jersey. Apart from selling to customers, Dailies supplies bread and vegetables to a large
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!