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
Ksenya-84 [330]
3 years ago
15

Winter's Toyland has a debt-equity ratio of .57. The pretax cost of debt is 8.2 percent and the required return on assets is 14.

7 percent. What is the company's cost of equity if you ignore taxes?
Business
2 answers:
Nataly [62]3 years ago
8 0

Answer:The answer is 18.41%

Explanation: =Cost of equity (Ke) is the rate of return a shareholder requires for investing in a business. Given return on asset and debt-equity, cost of equity will be;

Return on asset + (Return on asset - pre tax cost of debt) × debt to equity

Ignoring tax, cost of equity will be

= 0.147 + (0.147 - 0.082) × 0.57 = 0.18405 * 100

= 18.405%

True [87]3 years ago
6 0

Answer:

<em>WACC 10.995</em>

Explanation:

We solve using the Weighted average cost of capital assuming a tax rate of 0% as we have to ignore taxes. Hence, we get:

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

Ke 0.14700

Equity weight 0.43

Kd 0.082

Debt Weight 0.57

t 0

WACC = 0.147(0.43) + 0.082(1-0)(0.57)

WACC 10.99500%

You might be interested in
You have $7,800 to deposit. Regency Bank offers 6 percent per year compounded monthly (.5 percent per month), while King Bank of
hammer [34]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

PV= $7,800

Regency Bank:

i= 0.5 percent per month

n= 19*12= 228

King Bank:

i= 6 percent annually

n=19

To calculate the final value of each bank we need to use the following formula:

FV= PV*(1+i)^n

Regency bank:

FV= 7,800*(1+0.005)^228= $24,319.61

King bank:

FV= 7,800*(1.06)^19= $23,599.68

6 0
3 years ago
Explain how consumer and producer surplus affect economic well-being. When the price of a good or service is – enough, it will e
horrorfan [7]

Answer:

the general welfare will be the sum of consumer surplus and producer surplus.

Explanation:

The consumer and producer surplus assessment serves to measure the overall efficiency of the market, which in turn is associated with overall well-being. An efficient market is one in which both consumers and producers have the incentive to negotiate and effect trade.

Consumer surplus is the difference between the amount he or she is willing to pay and how much he or she actually pays for the product. This surplus is positive when the amount paid is less than the amount for which the consumer would be willing to pay.

Similarly, the producer's surplus is the difference between the market price and the price at which the seller is willing to produce and sell. When the producer's surplus is positive, it means that he sells the product for a price higher than the minimum value that would stimulate him to produce.

Thus, the general welfare will be the sum of consumer surplus and producer surplus.

4 0
3 years ago
Can you arrest someone with a bench warrant?? Please help
lukranit [14]
You can arrest someone with a bench warrant.
6 0
3 years ago
Read 2 more answers
On January 1, ABC, Inc., issued $100,000 of 10%, 5-year bonds, for $92,280. Interest is due semiannually. When ABC records the f
Rina8888 [55]

Answer:

A. The debit to Interest Expense will be greater because the market rate is greater than the stated interest rate.

Explanation:

The effective interest rate is the market rate which is real rate of interest payment after incorporating the compounding effect. When the effective interest rate is greater than the stated the bond will sell at discount. The stated interest rate determines the amount of interest borrower will have to pay. The effective interest rate lead to higher returns than stated interest rate.

5 0
3 years ago
A company uses LIFO. At the beginning of the current year its inventory was $200,000, and at the end of the current year its inv
andriy [413]

Answer:

FIFO ending inventory = $290000

Explanation:

given data

current year inventory = $200,000

end of the current year inventory = $250,000

start of the year LIFO reserve = $30000

end of the year  LIFO reserve = $40,000

solution

LIFO reserve is difference between inventory using LIFo and inventory using FIFO

so

FIFO ending inventory = LIFO ending inventory + LIFO reserve ...............1

put her evalue we get

FIFO ending inventory = $250000 + $40000

FIFO ending inventory = $290000

7 0
3 years ago
Other questions:
  • If a corporate bond with face value of $1,000 has an interest rate of seven percent paid once a year for a term of 10 years, wha
    6·1 answer
  • In addition to higher productivity and efficiency, high-performance work systems may also include what other outcomes?
    14·1 answer
  • Assume that securitization combined with borrowing and irrational exuberance in Hyperville have driven up the value of existing
    14·1 answer
  • Present Value of Bonds Payable; Premium Moss Co. issued $100,000 of four-year, 12% bonds with interest payable semiannually, at
    9·1 answer
  • The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted
    14·1 answer
  • Indigo Travel, Inc. sells tickets for a dude ranch excursion at Weeping T Ranch to Big City Corporation employees. The total pac
    7·1 answer
  • In 2019, Sheffield sold 1000 units at $500 each, and earned net income of $40000. Variable expenses were $400 per unit, and fixe
    7·1 answer
  • Select the correct answer from the drop-down menu.
    5·2 answers
  • Define demand and supply​
    14·1 answer
  • According to the value in diversity problem-solving approach A. surface-level diversity is less likely to lead to team cohesion
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!