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
Anni [7]
3 years ago
6

Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its befor

e-tax cost of debt is 11%, and its marginal tax rate is 40%. The current stock price is P0 = $29.00. The last dividend was D0 = $2.50, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. rs = 17.31 % WACC = 14.61 %
Business
1 answer:
Ivenika [448]3 years ago
7 0

Answer:

Ke 0.173103448

WACC 14.63250%

Explanation:

From the gordon model we determinate Ke

\frac{divends}{return-growth} = Intrinsic \: Value

\frac{divends}{Price} = return-growth

\frac{divends}{Price} + growth = return

D1 2.7 (we are given with D0 so we multiply by (1+g) to get D1

P 29

g 0.08

$Cost of Equity =\frac{2.7}{29} +0.08

Ke 0.173103448

Now we use this value to determinate the WACC

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

Ke 0.1731

Equity weight 0.75

Kd 0.11

Debt Weight 0.25

t 0.4

WACC = 0.1731(0.75) + 0.11(1-0.4)(0.25)

WACC 14.63250%

You might be interested in
Customers have a defined ________ when it comes to waiting in line at a retail checkout counter. The amount of time consumers ar
balu736 [363]

Answer:

The correct answer to the given above question is Zone of tolerance.

Explanation:

Zone of tolerance in simpler terms can be defined as the difference between a consumers desired level of service and the level of service a consumer considers adequate. This zone consists a range of various service performance that a consumer considers to be satisfactory. We can see this zone of tolerance when a consumer will stand in a line at a retail store , a consumer would be willing wait longer in the line if he or she thinks that product or service is valuable or a necessity to him and the waiting time would also depend on the type of store it is.

6 0
3 years ago
Read 2 more answers
Although a consumer may be happy with your company’s product/service, they will not hesitate to switch if another company provid
vesna_86 [32]

Answer:

delight

Explanation:

Consumer satisfaction refers to the level of happiness that a customer derives from the consumption or use of any product or service. The information related to the customer satisfaction is derived from the surveys and ratings. These information helps in the betterment and improvement of the product and services.  

Delighting the customer is a very important part of marketing. This helps in maintaining the customer relation.

4 0
3 years ago
The effects of depreciation to the entire domestic economy​
suter [353]

Answer:

Snsnnsns

Explanation:

Sans Yshhsnhhhshhnshhhjujusjuujejuujujijji

8 0
3 years ago
Inventories are part of investment and therefore included in gdp because
Natasha_Volkova [10]

Answer:

Explanation:

Inventories are part of investment and therefore included in GDP because firms produce goods and these goods may be unsold at the time GDP is computed

The value added method of calculating GDP recognizes inventory. Value added from raw materials to work in process and to finished goods are part of what goes into the computation of GDP

7 0
3 years ago
As it relates to source selection and procurement integrity, an appearance of a conflict of interest is not as bad as an actual
Luden [163]

Answer:

False

Explanation:

The reputation can be permanently harmed when a conflict of interest is possible.

7 0
3 years ago
Other questions:
  • The cost of an asset is $ 1,020,000​, and its residual value is $ 100,000. The estimated useful life of the asset is ten years.
    7·1 answer
  • Claxton Company purchased a van on January​ 1, 2018, for​ $820,000. The estimated life of the van was five​ years, and its estim
    15·1 answer
  • The Sherman Antitrust Act Group of answer choices was passed to encourage judicial leniency in the review of cooperative agreeme
    11·1 answer
  • A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the
    8·1 answer
  • In the absence of market failures, when the government taxes market participants, the effect is to move the market: Group of ans
    11·1 answer
  • According to liquidity preference theory, a decrease in the price level causes the interest rate to:a. increase, which increases
    6·1 answer
  • Egrane, Inc.'s monthly bank statement showed the ending balance of cash of $14,800. The bank reconciliation for the period showe
    7·1 answer
  • The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fisc
    9·1 answer
  • Ben set up an elaborate scheme to mine gold in the Rockies. He had a large town meeting and sold stock in his company for only $
    10·1 answer
  • Ok but seriously don't click on the site in the comments...unless you want to
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!