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
shutvik [7]
3 years ago
14

Assume that we are in the MM world. Health and Wealth Company is financed entirely by common stock that is priced to offer a 12

percent expected return. If the company repurchases 20 percent of the common stock and substitutes an equal value of debt yielding 8 percent, what is the expected return on the common stock after refinancing
Business
1 answer:
Levart [38]3 years ago
7 0

Answer:

13%

Explanation:

the new cost of equity = old cost of equity + [(debt / equity) x (old cost of equity - cost of debt)]

the new cost of equity = 12%+ [(20 / 80) x (12% - 8%)] = 12% + 1% = 13%

Since we are in the MM world, taxes do not exist, therefore they are not included in the equation.

You might be interested in
In 2019, pastured eggs sold for more than twice the price of cage-free eggs and almost 5 times the price of conventional eggs, m
Hunter-Best [27]
Answer answer 62837 blah blah
3 0
2 years ago
Regarding generally accepted accounting principles​ (GAAP), which of the following statements is​ incorrect? A. Relevant informa
Lady_Fox [76]

Answer: The statement "A. Relevant information is​ complete, neutral, and free from error." is​ incorrect

Explanation: The generally accepted accounting principles are a set of rules and norms that serve as an accounting guide to formulate criteria related to the measurement of equity and to the information of the patrimonial and economic elements of an entity. While one of these 14 principles speaks of neutrality in none mentions that Relevant information is complete, neutral, and free from error

8 0
3 years ago
What are the kitchen tools and equipment needed to cook pancake.​
Firlakuza [10]
You need batter a pan something to flip with like a spatula. If you need to be specific you can say a whisk,a bowl, skillet,griddle,spatula.

Ingredients: flour, sugar,baking powder,salt,milk, butter,egg,oil

Added toppings as well such as syrup or something
7 0
2 years ago
An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred t
Ann [662]

Answer:

free rider

Explanation:

Free Rider is someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good.

7 0
3 years ago
Read 2 more answers
The phrase "invisible hand" means that:
never [62]

Answer:

The correct answer is letter "B": The tendency of competition to cause individuals and firms to unintentionally promote the interests of society.

Explanation:

In his book "<em>An Inquiry into the Nature and Causes of the Wealth of Nations</em>" (1776), British economist Adam Smith (1723-1790) introduced the term "invisible hand" to refer that economic factors (buyers and sellers) naturally influence in the fluctuations of supply and demand without the need for the intervention of the government.  

According to Smith, buyers and sellers interactions act as an "invisible hand" arranging proper levels of competition between businesses and promoting the best interest of societies.

4 0
3 years ago
Other questions:
  • What impact might an economic downturn have on a borrower’s fixed-rate mortgage?
    15·2 answers
  • Scallion Company received the following reports of its defined benefit pension plan for the current calendar year: PBO Plan asse
    15·2 answers
  • The mayor gave the winner a blue ribbon which kind of complement is the word in bold
    7·2 answers
  • Explain why two employees at a company, earning the same gross pay, might have different net pays
    13·1 answer
  • Fredrico has to lead a training for his company. He wants to include a visual element to help engage his audience. What type of
    7·1 answer
  • Even though copyrights are exclusive rights, US copyright law makes some exceptions. What should an individual do to use copyrig
    11·1 answer
  • Vaughn’s Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $1270
    7·1 answer
  • lue Box Beach Chairs has the following standards to make beach chairs: Standard Quantity Standard Price Direct materials 2.2 pou
    9·1 answer
  • Four years ago, Lyle Mercer was injured in a railroad accident and sued the railroad for damages. The jury required the railroad
    9·1 answer
  • Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $56 to buy from farmers and $18 to
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!