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3 years ago

Rebello's preferred stock pays a dividend of $1.00 per quarter, and it sells for $55.00 per share. what is its effective annual

1 answer:

3 0

To solve for the effective annual rate of return:

Effective annual rate of return = (1+(quarterly dividend/preferred stock price))/periods per year)-1
Quarterly dividend = $1.00
Preferred stock price = $55.00
Periods per year = 4
EFF annual rate of return = (1+(1.00/55))/4-1
EFF annual rate of return = 7.47%

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Consider the following information for Evenflow Power Co., Debt: 5,000 6.5 percent coupon bonds outstanding, $1,000 par value, 1

melamori03 [73]

Answer:

WACC 10.07765%

Explanation:

We solve for the cost of debt by solving for the discount rate which makes the future coupon payment and maturity of the bond equal to 1,020

This is solved using excel or a financial calculator

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 32.50

time 34

rate 0.03153274

$32.5 \times \frac{1-(1+0.03153274)^{-34} }{0.0315327401919093} = PV\\$

PV $672.0015

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 1,000.00

time 34.00

rate 0.03153274

$\frac{1000}{(1 + 0.03153274)^{34} } = PV$

PV 348.00

PV c $672.0015

PV m $347.9985

Total $1,020.0000

annual cost of debt:

0.031532 x 2 = 0.063064 = 6.31%

debt outstanding:

5,000 bonds x $ 1,000 x 102/100 = 5,100,000

equity:

105,000 shares x $59 each = 6,195,000

For the equity we solve using CAMP

$Ke= r_f + \beta (r_m-r_f)$

risk free = 0.05

market rate = 0.09

premium market = (market rate - risk free) 0.085

beta(non diversifiable risk) = 1.17

$Ke= 0.05 + 1.17 (0.085)$

Ke 0.14945

Now we solve for the WACC

$WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})$

D 5,100,000

E 6,195,000

V 11,295,000

Equity weight 0.5485

Debt Weight 0.4515

Ke 0.14945

Kd 0.0631

t 0.34

$WACC = 0.14945(0.5485) + 0.0631(1-0.34)(0.4515)$

WACC 10.07765%

7 0

3 years ago

The cinematographer is also known as the ________.

castortr0y [4]

Known as a DOP/DP.
Using it for film and television,

7 0

4 years ago

Tim loaned a friend $4,000 to buy a used car. In the current year, Tim’s friend declares bankruptcy and the debt is considered t

julsineya [31]

Answer:

e. $3,000 short-term capital loss (STCL)

Explanation:

From the given information;

Tim may deduct only $3,000 short-term capital loss (STCL) because the loan is not business-related. SO, he can claim a maximum of $3000 in the current year and the remaining can be forwarded to ordinary income on the individual return in any one tax year.

5 0

3 years ago

A potential loan customer wants to borrow $4 million to purchase and manage a strip mall with a pizza restaurant, crafts store,

Lena [83]

Answer:

The loan officer takes the following steps (not necessarily in this order) to assess the creditworthiness of the borrower:

- Run a credit report using any of the major credit reporting agencies like TransUnion, Experian or Equifax.

- Obtain accounts receivable aging reports.

- Check references.

- Conduct a gut check using creative investigative methods.

Explanation:

There are some factors that can affect creditworthiness or credit score such as: bill payment history, which comprises 35 percent of the total credit score and the most important factor in calculating credit scores, the level of debt, credit history age, types of credit on a report and number of credit inquiries, credit utilization, length of credit history. There are five “C's” to consider during a credit risk assessment: character, capacity, capital, condition, and collateral. Whether a sale is a domestic or international transaction.

The main factor lenders consider in determining a person's creditworthiness is investigation of a person's income, current debts, personal life, and past history of borrowing and repaying debts, capacity to pay, character, and any collateral you may have for loan guaranteed only by a promise to repay.

3 0

3 years ago

The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for t

andre [41]

Answer:

A. $66,000

B. $66,000

C. $66,000

Explanation:

Dollars in dollars out can be easily understood by just deducting cash expenses from the revenue received from cash sales. we can not deduct depreciation expense as it is a non-cash item.

DATA

Revenue = 160,000

Variable cost = 50,000

Rental cost = 30,000

Depreciation = 10,000

Profit before tax = 70,000

Tax (70,000 x 20%) = 14,000

Net Income = 56,000

a) Dollars in minus dollars out

Dollars in minus dollars out = Revenue - rental costs - variable costs - taxes Dollars in minus dollars out = $160,000 - $30,000 - $50,000 - $14,000

Dollars in minus dollars out = $66,000

b) Adjusted accounting profits

Operating cash flow = Net income + depreciation

Operating cash flow = $56,000 + $10,000

Operating cash flow = $66,000

c) Add back depreciation tax shield

Operating cash flow = [(Revenue - rental costs - variable costs) × (1 - 0.2)] + (depreciation × 0.2)]

Operating cash flow = ($160,000 - $30000 - $50,000)*0.8 + $10,000*0.2 Operating cash flow = $66,000

3 0

3 years ago