Which of the following might vary in on online purchase depending on where the purchaser lives?

5,000 7.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 105 percent of par; the bonds ma

vitfil [10]

Answer:

10.53%

Explanation:

WACC = wE*rE + wP*rP + wD*rD(1-tax)

<u>Market values;</u>

Debt = 1.05 *5,000*1000 = 5,250,000

Preferred stock = 15,500 *107 = 1,658,500

Common equity = 105,000 *63 = 6,615,000

Total market value = 13,523,500

wE = 6,615,000/ 13,523,500 = 0.4891

wP= 1,658,500/13,523,500 = 0.1226

wD = 5,250,000/13,523,500 = 0.3882

<u>Cost of capital;</u>

Cost of common equity, rE using CAPM;

rE = 0.06 + (1.13*0.09) = 0.1617

rE = 16.17%

Cost of preferred stock = 6%

Cost of debt

using a financial calculator, input the following; N= 38, PV = -1050, PMT = 37.5,

FV =1000, then CPT I/Y = 3.51% . So annual rate = 3.51% *2 = 7.02%

WACC = (0.4891*0.1617) +(0.1226* 0.06) + [0.3882 *0.0702(1-0.31)]

WACC = 0.0791 + 0.007356 + 0.0188

WACC = 0.1053 or 10.53%

4 0

3 years ago

Splish Corporation has retained earnings of $707,000 at January 1, 2020. Net income during 2020 was $1,428,500, and cash dividen

BartSMP [9]

Answer:

Explanation:

Statement of retained earning represent the changes in retained earning balance during the year and accumulated beginning balance of the period and Ending balance as well. It deals with all the adjustment in retained earning like net income transfer fro the year, dividend paid during the year etc.

Splish Corporation

Retained Earning Statement

for the year ended December 31, 2020

$

Retained Earning at January 1, 2020 707,000

Less: Cash Dividend paid during 2020 85,000

Add: Net Income for the year 2020 <u>1,428,500</u>

Retained Earning ath December 31 2020 <u>2,050,500</u>

5 0

3 years ago

Alfred, a trader at the New York Stock Exchange (NYSE), executes the decisions made by investors and takes action based on reque

densk [106]

Answer:

Capital Market

Explanation:

Capital markets are the financial markets which deal in bonds, stock, mutual funds and various other long term investments. Alfred is a trader who works at a capital market because that is the market where decisions are made by the investors and traders work accordingly. Moreover, traders in the capital market alter the decisions and make new ones based on the request of buyers and sellers.

8 0

3 years ago

The multiplier effect of changes in government transfers is: greater than the multiplier effect of a change in government spendi

sergiy2304 [10]

Answer: less than the multiplier effect of a change in government spending.

Explanation:

The multiplier effect of government transfers refers to the measure by which the aggregate demand will increase by as a result of government transfers increasing.

This multiplier is less than the multiplier effect of a change in government spending. This is because government spending affects more people in the economy as it targets both companies and consumers. Government transfers on the other hand, target only welfare and unemployment payments amongst others so it cannot have the same effect as government spending.

5 0

2 years ago

Please select the type of shock that would produce the indicated shift.

ankoles [38]

The various types of shocks that will be caused are:

A leftward shift in the AD curve - Negative demand shock.
A leftward shift in the SRAS curve - Negative supply shock.
A rightward shift in the SRAS curve - Positive supply shock.
A positive shift that leads to a higher aggregate price level. - Positive demand shock.
A rightward shift in the AD curve - Positive demand shock.
A negative shift that leads to a lower aggregate price level - Negative demand shock.
Stagflation - Negative supply shock.
A negative shift that leads to a higher aggregate price level - Negative supply shock.
A positive shift that leads to a lower aggregate price level - Positive supply shock.

<h3>What causes shocks in the economy?</h3>

When there is a change in the components of demand or supply, there will be a shift in the Aggregate Demand and Supply Curves to show that either demand or supply has changed as a result.

For instance, if there is a weaker harvest for a crop, there will be a leftward shift in the SRAS curve which would lead to a negative supply shock.

In conclusion, supply and demand are prone to shocks.

Find out more on Stagflation at brainly.com/question/23113698.

8 0

2 years ago