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Anna11 [10]
3 years ago
11

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding

bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 11.54%. What is the company's cost of equity capital? Round your answer to two decimal places.
Business
1 answer:
Marrrta [24]3 years ago
8 0

Answer:

Cost of equity = 14.43%

Explanation:

Weigheted Average cost of capital is computed using the formula below:

WACC = (Wd×Kd)  + (We×Ke)

           Kd= aftre tax cost of debt= 12%× (1-0.4)= 7.2%

           Wd =Proportion of debt= 40%

           We = proportion of equity = 60%

            Ke= cost of equity.

let the cost of equity be "y"

WACC = 11.54

11.54 = (40%× 7.2%) + (60% × y)

0.1154  = 0.0288 + 0.6y

0.1154 - 0.0288 = 0.6y

y =(0.1154 - 0.0288)/0.6

y = 0.1443 × 100

y =14.43%

Cost of equity = 14.43%

         

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Bade Midwifery's cost formula for its wages and salaries is $1,420 per month plus $246 per birth. For the month of October, the
saul85 [17]

Answer:

activity variance =  $984 F

Explanation:

given data

wages and salaries = $1,420 per month

per birth = $246

planned for activity = 107  births

actual level of activity = 103 births

actual wages and salaries = $27,795

to find out

activity variance for wages and salaries

solution

we know wages and salaries cost for October is

wages and salaries Planning budget  = 1420 + ( 107 × 246 )

wages and salaries Planning budget = $27742

and

Wages and salaries  Flexible budget = 1420 + ( 103 × 246 )

Wages and salaries  Flexible budget = $26758

so

activity variance = $27742 - $26758

activity variance =  $984 F

4 0
3 years ago
Mary is a shareholder in CarrollCo, a calendar year S corporation. At the beginning of the year, her stock basis is $10,000, her
Troyanec [42]

Answer:

AAA = (8000)

STOCK BALANCE = 0

AEP = 2000

Explanation:

-----------------AAA-------- stock basis---------AEP

Beg. Bal--- 2000 - - - - 10,000 - - - - - - 6,000

Distribution (2000) - - - - (2000) - - - - - (4000)

Balance - - - 0 - - - - - - - 8000 - - - - - - 2000

LTCG - - - 2000 - - - - - 2000 - - - - - - - - 0

Balance - -2000 - - - - - 10,000 - - - - - - 2,000

Loss - - - (10000) - - - - (10000) - - - - - - - 0

Ending - - (8000) - - - - - 0 - - - - - - - - - 2000

ENDING BALANCE :

AAA = (8000)

STOCK BASIS = 0

AEP = 2000

Beg. bal = beginning balance

LTCG = Long term capital gain

3 0
3 years ago
Fein Company provided the following information relating to cash payments:
BlackZzzverrR [31]

Answer:

Fein Company

Schedule of Cash Payments

For the Month of August 202x

Salaries expenses:

From July salaries                  $3,230

<u>From August salaries            $31,860</u>

Total salaries                        $35,090

Direct materials:

From July purchases             $61,600

<u>From August purchases        $14,600</u>

Total direct materials            $76,200

Overhead expenses:            $64,850

Debt payments:

Principal                                 $15,000

<u>Accrued interests                      $450</u>

Total debt payment              $15,450

Total cash payments           $191,590

6 0
3 years ago
The output of u. S. Citizens who work in canada would be included in the
mestny [16]

The output of u. S. Citizens who work in Canada would be included in the: D. Gross domestic product.

<h3>What is gross domestic product?</h3>

Gross domestic product  can be defined as the value of goods or products produce within a country at a particular period of time.

If a united State of American citizen work in Canada the output of the United State citizen will be added to the Gross domestic product of Canada.

Therefore the correct option is D.

Learn more about gross domestic product here:brainly.com/question/1383956

#SPJ12

6 0
2 years ago
What percentage profit is made on a sale if the selling price is $225,000 and the purchase price is $190,000?
IgorLugansk [536]

The percentage profit = 18%

A profit is made on sale with selling price more than the purchasing price. The purchasing price is also known as the cost price.

Given the selling price = $225000

and the purchasing price = $190000

Since the selling price is more than the purchasing price, there is obviously a profit gained.

Now profit amount = Selling price - Purchasing price

                                = 225000-190000 = $35000

Profit percentage = (Profit / Purchasing price) x 100%

                             = (35000 / 190000) x 100%

                             = 18.42%

Learn more about profit at brainly.com/question/19104371

#SPJ4

5 0
2 years ago
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