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Mashutka [201]
3 years ago
11

Phillips equipment has 75,000 bonds outstanding that are selling at par. bonds with similar characteristics are yielding 7.5 per

cent. the company also has 750,000 shares of 6 percent preferred stock and 2.5 million shares of common stock outstanding. the preferred stock sells for $64a share. the common stock has a beta of 1.21 and sells for $44 a share. the u.s. treasury bill is yielding 2.3 percent and the return on the market is 11.2 percent. the corporate tax rate is 34 percent. what is the firm's weighted average cost of capital
Business
1 answer:
Basile [38]3 years ago
7 0

Bonds = 75,000*1000 = 75 Million

Preferred stock = 750,000*64 = 48 Million

Common stock = 2.5 Million *44 =110 Million

Total capital = 75+48+110 = 233 Million

Weight of debt (Wd) = 75/233 = 0.3219

Weight of preferred stock (Wp)= 78/233 = 0.206

Weight of equity (We) 1-0.3219-0.206 = 0.4721

Cost of debt after tax (Rd)= 7.5%*(1-0.34) = 4.95%

Cost of preferred stock (Rp)=6/64 = 9.375%

Cost of equity(Re) = rf + beta*(rm-rf) = 2.3+1.21*(11.2-2.3) = 13.069%

WACC = Wd *Rd + Wp*Rp + We*Re

WACC = 0.3219*4.95 + 0.206*9.375 + 0.4721*13.069% = 9.69%

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Levelor Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during Ma
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The correct answer is $473 (Unfavorable).

Explanation:

According to the scenario, the given data are as follows:

Actual overhead = $11,183

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Controllable variance  = Actual overhead - Budgeted overhead

By putting the value, we get

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What are the job training/education requirements for being a judge?
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Answer the following statement true (T) or false (F).
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False

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This process is very similar to scientific research, only that it is carried out on man made objects.

5 0
3 years ago
An employee earns $28 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. If the employee worked 55 h
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Answer: Gross pay- $1750.00

Net pay - $1,215.75

Explanation: Gross pay = Nomal time =$28*40= $1,120. Overtime = $28*1.5*15= $630 Total= $1,750

Net pay = $1,750 less Security tax, Medicare tax, federal income tax withheld.

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Net pay= $1,750-$105-$26.25-$403

= $1,215.75

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