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Ksju [112]
3 years ago
15

Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its befor

e-tax cost of debt is 8%, and its marginal tax rate is 40%. The current stock price is P0 5 $22.00. The last dividend was D0 5 $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC?
Business
1 answer:
Arturiano [62]3 years ago
4 0

Answer:

Cost of common equity is 15.7%  and WACC is 7.2%

Explanation:

D1 is  

D1= 2.25 (1+0.05)

The cost of common equity is  

Rs = 2.36/ 22.00 + 5% =0.157= 15.7%

The cost of common equity is weighted average cost of capital (WACC)  

WACC = (0.35) * (0.08) (1- 0.40) + 0 preferred stock+ (0.35) * (0.157)

WACC = 0.03 *0.6 + 0 + 0.054

WACC = 0.018 + 0.054

WACC = 7.2%

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Journalize the entries to record the following transactions for Mountain Realty Inc.:
kherson [118]

Answer and Explanation:

The journal entries are shown below"

On Aug 26

Cash Dr $768,000

         To Common stock $640,000

         To Additional paid in capital $128,000

(Being issuance of the common stock is recorded)

On Oct 1

Cash Dr $410,000

        To preferred stock $410,000

(Being the issuance of the preferred stock is recorded)

On Nov 30

Cash Dr $187,000

         To Common stock $170,000

         To Additional paid in capital $17,000

(Being issuance of the common stock is recorded)

3 0
3 years ago
Zapper has beginning equity of $293,000, net income of $69,000, dividends of $58,000 and stockholder investments of $24,000. Its
Yuki888 [10]

Answer:

$328,000

Explanation:

As we all know that:

Ending Equity = Opening Equity + Share Issues + Net Income – Net Loss – Dividends Paid

Here,

Opening Equity is $293,000

Money raised through Shares Issuance was $24,000

Net Income would be $69,000

Dividends paid were $58,000

There were no losses as their is Profit for the year (Net Income).

By putting values, we have:

Ending Equity = $293,000  +  $24,000   +  $69,000   -  $58,000

= $328,000

8 0
3 years ago
Because of marketing, we have more choices, better products, and lower prices.
Snezhnost [94]

Answer:

True

Explanation:

That  is true for any product but luxury products.

8 0
3 years ago
Cheryl's Cookies has decided to create a charity that ships cookies to soldiers stationed in Syria. The soldiers could request t
gtnhenbr [62]

Hey! How are you? My name is Maria, 19 years old. Yesterday broke up with a guy, looking for casual sex.

Write me here and I will give you my phone number - *pofsex.com*

My nickname - Lovely

4 0
3 years ago
Which company has the comparative advantage in producing large tubes of toothpaste? Sparkling Fresh! Bright White Mmmint.
kakasveta [241]

"Bright White" Company has the comparative advantage in producing large tubes of toothpaste.

<h3>What is the term Comparative advantage about?</h3>

Comparative advantage determines the country's specialization by comparing opportunity cost whereas absolute advantage determines country's productivity.

Comparative advantage have some disadvantage also like it can exploit the nation's labor and some economic resources.

Therefore, correct option is B.

Learn more about comparative advantage, refer to the link:

brainly.com/question/15217561

3 0
2 years ago
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