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
dedylja [7]
3 years ago
7

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ

ity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 10.50%, and the tax rate is 25%. The firm will not be issuing any new stock. What is Quigley's WACC?
Business
2 answers:
san4es73 [151]3 years ago
8 0

Answer:

8.1%

Explanation:

Firstly, let look at the formula for calculating weighted average cost of capital (WACC):

WACC = (D/A) x r_D x (1-t) + (E/A) x r_E + (PE/A) x r_PE, where:

A: Market value of company asset;

D: Market value of company debt;

E: Market value of company equity;

PE: Market value of company preferred equity;

r_D: cost of debt;

r_E: cost of equity/retained earnings;

r_PE: cost of preferred equity;

t: tax rate

Putting all the numbers together, we have:

WACC = 35% x 6.5% x (1-25%) +  55% x  10.5%  + 10% x 6% = 8.1%

Korolek [52]3 years ago
4 0

Answer:

The answer is 8.08%.

Explanation:

We have the WACC is equal to weighted average of After-tax cost of Debt, Cost of preferred shares and Cost of common shares.

WACC = Percentage of Debt in capital structure * (1 - tax rate) * Cost of Debt + Percentage of Preferred share in capital structure * Cost of preferred shares + Percentage of common equity in capital structure * Cost of common equity = 35% * ( 1 - 25%) * 6.5% + 10% * 6.00% + 55% * 10.50% = 8.08%.

So, the WACC is 8.08%.

You might be interested in
A specific group of related businesses in known as a/an _________.
andrey2020 [161]
A specific group of related businesses is known as a *chain.
6 0
3 years ago
Why should a notary signing agent learn all about the closing documents in a loan package if they are not allowed to provide adv
shusha [124]

Answer:In American law, a signing agent or courtesy signer is an agent whose function is to obtain a formal signature of an appearer to a document. In common parlance, most jurisdictions require the appearer to sign before a notary public. From this, the practice of a notary public designating themselves as a signing agent has arisen. There are notaries public who specialize in the notarization of real estate transfer and loan document signings. Signing agents often have certification and training through private organizations, but is not a requirement in law, although it may be a requirement of the lender in the oversight of real estate transaction document signatures.

Explanation:

4 0
2 years ago
The following information is provided for each division. Investment Center Net Income Average Assets Cameras and camcorders $ 6,
kotegsom [21]

Answer and Explanation:

The calculation of the residual income for each division is given below:

<u>Target Income    Cameras & Camcorders Phones & Comm Computers & Acc. </u>

Average Assets $20,600,000         $21,500,000               $16,600,000

Target Return                14%                       14%                              14%

Target Income        $2,884,000           $3,010,000                  $2,324,000

<u>Residual Income    Cameras & Camcorders Phones & Comm Computers & Acc.</u>

Net Income              $6,800,000               $3,010,000           $1,100,000

Less: Target Income  $2,884,000           $3,010,000            $2,324,000

Residual Income       $3,916,000              $0                         -$1,224,000

6 0
3 years ago
May 31, 2018 June 30, 2018Total Assets $211,000 $209,000Total Liabilities 133,000 99,000Begin by identifying the accounting equa
daser333 [38]

Answer:

a. $7,000

b. $39,500

c. $19,000

Explanation:

a. The computation of the net income or net loss is shown below:

= (June 30,2018 assets - June 30,2018 liabilities - contribution) - (May 31,2018 assets - May 31,2018 liabilities)

= ($209,000 - $99,000 - $25,000) - ($211,000 - $133,000)

= $85,000 - $78,000

= $7,000

b. The computation of the net income or net loss is shown below:

= (June 30,2018 assets - June 30,2018 liabilities + cash withdrawn) - (May 31,2018 assets - May 31,2018 liabilities)

= ($209,000 - $99,000 + $7,500) - ($211,000 - $133,000)

= $117,500 - $78,000

= $39,500

c. The computation of the net income or net loss is shown below:

= (June 30,2018 assets - June 30,2018 liabilities + cash withdrawn - contribution) - (May 31,2018 assets - May 31,2018 liabilities)

= ($209,000 - $99,000 + $22,000 - $35,000) - ($211,000 - $133,000)

= $97,000 - $78,000

= $19,000

6 0
3 years ago
The journal entry for the purchase of inventory on account using the perpetual inventory system is:.
Solnce55 [7]

The journal entry for the inventory purchased will be to record the sale and another one to record the cost of the sale.

<h3>What is a journal entry?</h3>

It should be noted that a journal entry is used to record the financial activities of a company.

In this case, the journal entry for the purchase of inventory on account using the perpetual inventory system is to record the sale and another one to record the cost of the good.

Learn more about inventory on:

brainly.com/question/24868116

7 0
2 years ago
Other questions:
  • Observational data refer to facts and figures newly collected for the project at hand. facts and figures obtained by asking peop
    10·1 answer
  • what is a process of interaction and integration among people, businesses, and governments of different cultures?
    13·1 answer
  • Kurt has $4,500 for a down payment and thinks he can afford monthly payments of $300. If Kurt can finance a vehicle with a 7 per
    7·1 answer
  • How can capital budgeting tools assist in evaluating a manager who is responsible for retaining customers of a cellular telephon
    7·1 answer
  • A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is curre
    8·1 answer
  • A(n) _____ is done to test each individual component (often a program) to ensure that it is as defect-free as possible. a. user
    13·1 answer
  • An investor thought that market interest rates were going to decline. He paid $19,000 for a corporate bond with a face value of
    8·1 answer
  • The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to
    6·1 answer
  • What is a karst scenery​
    8·1 answer
  • Organizational purpose serves as the basis for an organization's ______. (select all that apply)
    15·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!