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MA_775_DIABLO [31]
2 years ago
15

A firm has 12,000 shares of common stock outstanding with a book value of $20 per share and a market value of $39. There are 5,0

00 shares of preferred stock with a book value of $10 and a market value of $26. There is a $400,000 face value bond issue outstanding that is selling at 87% of par. What weight should be placed on the preferred stock when computing the firm's WACC
Business
1 answer:
lana [24]2 years ago
6 0

Answer:

13.7%

Explanation:

The weight to be placed on preferred while computing the company's weighted average cost of capital (WACC) is the market value of the preferred stock divided by the market value of the company as a whole.

market of preferred stock=5,000*$26=$130,000

Market value of the company=market value of common stock+market value of preferred stock+market value of bond

common stock market value=12,000*$39=$468,000

market value of bond=$400,000*87%=$348,000

Weight of preferred stock=$130,000 /($130,000 +$468,000+$348,000)=0.137420719 =13.7%

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Answer:

The present of worth of machine operating cost is $ 228,061.55  

 

Explanation:

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6 0
2 years ago
Company send and receive messages daily via email, voice mail, text and traditional memos. A persuasive message occurs when a pe
Burka [1]

Explanation:

Persuasive message:

  1. Cordial, positive communication, with a focus on negotiation and openness to receiving proposals and feedbacks.
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Deliver bad news in business:

  1. Be transparent and communicate all the reasons that led the organization to face the bad news that is being communicated, maintaining a realistic but positive approach to maintain the sense of unity and overcoming of employees.
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8 0
3 years ago
Contribution Income Statement and Cost-Volume-Profit Graph Picnic Time produces a picnic basket that is sold for $100 per unit.
Ira Lisetskai [31]

Answer:

Graph Picnic Time

Contribution Income Statement

For the Month of July

Sales                                               $400,000

Less variable costs:

Direct materials                              $100,000

Direct labor                                        60,000

Manufacturing overhead                  20,000

Selling and administrative                 16,000

Total variable costs                       $196,000

Contribution margin                     $204,000

Less fixed cost:

Manufacturing overhead $36,000

Selling and administrative 68,000

Total fixed costs                            $104,000

Profit                                              $100,000

Explanation:

a) Data and Calculations:

Selling price per picnic basket = $100

July Production and sales = 4,000 baskets

Variable Costs per Unit:

Manufacturing:

Direct materials              $25

Direct labor                        15  

Manufacturing overhead   5

Total                               $45

Selling and administrative 4

Total                               $49

Fixed Costs per Month

Manufacturing overhead $36,000

Selling and administrative  68,000

Total                                 $104,000

Contribution Income Statement

For the Month of July

Sales                                               $400,000 ($100 * 4,000)

Less variable costs:

Direct materials                              $100,000 ($24 * 4,000)

Direct labor                                        60,000 ($15 * 4,000)

Manufacturing overhead                  20,000 ($5 * 4,000)

Selling and administrative                 16,000($4 * 4,000)

Total variable costs                       $196,000

Contribution margin                     $204,000

Less fixed cost:

Manufacturing overhead $36,000

Selling and administrative 68,000

Total fixed costs                            $104,000

Profit                                              $100,000

8 0
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Suppose Hoosiers, a specialty clothing store, rents space at a local mall for one year, paying $13,800 ($1,150/month) in advance
tigry1 [53]

Answer:

1.

Dec 31    Rent expense                   $3450 Dr

                  Prepaid Rent                       $3450 Cr

2.

Oct 1     Prepaid Rent                        $13800 Dr

                  Cash                                       $13800 Cr

3.

Year end balances at 31 December:

Rent Expense = $3450

Prepaid Rent = $10350

Explanation:

Assumption: The year end for the business in on 31 December.

1.

The rent is paid in advance thus it is an asset. On 31 December the adjusting entry will be made under the accrual principle to match the current period's rent expense and record it in the period to which it belongs to. Thus we will credit the rent expense for 3 months i.e. October, November and December. We will credit the asset account that is Prepaid Rent.

2.

The prepayment of rent is creating an asset account in the title of prepaid rent. The entry would be to record the asset prepaid rent by the full amount of the rent prepaid and credit the other asset account through which the payment is being made.

3.

The adjusted year end balance for rent expense will be the rent expense paid for this period that is $1150 * 3 = 3450

The balance in the prepaid rent account after adjusting the rent expense will be,

Prepaid rent = 13800 - 3450 = $10350

8 0
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Gnesinka [82]
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