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Alex Ar [27]
3 years ago
7

Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt-equity ratio of .45. The cost of equity is 17.6 p

ercent and the pretax cost of debt is 8.9 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 35 percent?
Business
1 answer:
jeka943 years ago
6 0

Answer:

We = 68.97%

Explanation:

debt to equity ratio = 0.45\\\frac{Debt}{Equity} = 0.45\\ Debt = 0.45 Equity\\\\Total capital = Equity + Debt = Equity + 0.45 Equity\\                      Total Capital = Equity (1+0.45)= 1.45 Equity\\

Let weight of equity in the capital structure be represented by We.

We = \frac{Equity}{1.45Equity} = \frac{1}{1.45} = 0.6897

Therefore the capital structure weight of the firm's equity is 68.97%.

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If Joel earns a 7 percent after-tax rate of return, $27,000 received in two years is worth how much today
steposvetlana [31]

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Explanation:

For this question, we have to calculate the present value of $27,000 with the given rate and the time that have already been given in the question to know the worth tiday. This will then be:

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8 0
3 years ago
Does anybody know this please help !?
levacccp [35]

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6 0
3 years ago
Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. The total value of yo
diamong [38]

Answer:

hope this helps

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 21.5% and a beta of 1.70. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? Do not round your intermediate calculations.

Old portfolio return

11.0%

Old portfolio beta

1.20

New stock return

21.5%

New stock beta

1.70

% of portfolio in new stock = $ in New / ($ in old + $ in new) = $10,000/$100,000=

10%

New expected portfolio return = rp = 0.1 × 21.5% + 0.9 × 11% =

12.05%​

New expected portfolio beta = bp = 0.1 × 1.70 + 0.9 × 1.20 =

1.25​

Explanation:

7 0
2 years ago
Suppose the civilian noninstitutionalized working-age population is 35.9 million in in a hypothetical economy. Of these, 4.4 mil
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Part time employees are considered employed.

5 0
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