Answer:
The WACC is 12.24%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure can be comprised of three components which are debt, preferred stock and common stock.
The formula for WACC is,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component in the capital structure
- r represents the cost of each component
- We take the after tax cost of debt. Thus we multiply the cost of debt by (1 - tax rate)
WACC = 0.3 * 0.10 * (1 - 0.4) + 0.03 * 0.13 + 0.67 * 0.15
WACC =0.1224 or 12.24%
Answer:
D.agency shop agreement
Explanation:
Agency shop agreement is one where a company or employer is allowed to employ both union and non-union workers. This does not affect existence of the Union.
The employees who are non-union members however need to pay a fee for collective bargaining cost. This fee is called agency fee.
In the given scenario Mary chose not to join the union representing her fellow repair workers, she would still have to pay a fee to the union.
She is part of a agency shop agreement
Answer:
The company's WACC is 9.14%
Explanation:
cost of preferred stock
= (dividend on preferred stock)/(current market price)
= [$100*4%]/$72
= 5.56%
total finance = debt + equity + preferred stock
= (8,000*$1,060) + (310,000*$57) + (15,000*$72)
= $8,480,000 + $17,670,000 + $1,080,000
= $27,230,000
weight of debt = debt/total finance
= $8,480,000/$27,230,000
= 0.31
weight on equity = equity/total finace
= $1.080.000/$27,230,000
= 0.04
WACC
= (weight of debt*after tax cost of debt) + (weight on equity*cost of equity)
= (0.31*0.0393) + (0.65-0.1185) + (0.04*0.0556)
= 9.14%
Therefore, The company's WACC is 9.14%
Solution:
a-1) Calculation of the number of shares used for calculating Basic Earning per share
No. of shares period
752000 3/12 188000
1314000 9/12 985500
Weighted average No of shares outstanding 1173500
a-2) Calculation of the number of shares used for calculating Diluted Earning per share
No. of shares period
752000 3/12 188000 1314000 3/12 328500 with Bonds 1340400 6/12 670200
Weighted average No of shares outstanding 1186700
Each bonds to per converted into 44 common stock
i.e. 600 Bonds *44 common=26400 Potential equity shares
b-1) Calculation of earning figures to be used for calculating Basic Earning per share
After Tax net Income will be earnings = $1614000
b-2) Calculation of earning figures to be used for calculating Diluted Earning per share
After tax net Income 1614000
Interest for the 2017 =600000*7*6/12 21000
Tax effect on Interest @40% 8400 12600 1626600
Earnings = 1626600
