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iren2701 [21]
3 years ago
7

Auto Parts is considering a merger with Car Parts. Car Parts market-determined beta is 0.9, and the firm currently is financed w

ith 20% debt, at an interest rate of 8%, and its tax rate is 25%. If Auto Parts acquires Workman, it will increase the debt to 60%, at an interest rate of 9%, and the tax rate will increase to 35%. The risk-free rate is 6% and the market risk premium is 4%. What will Car Parts required rate of return on equity be after it is acquired?
Business
1 answer:
kvasek [131]3 years ago
5 0

Answer: 9.7%

Explanation:

Given Data

Rf = Risk free return = 6%,

Rpm = Risk premium = 4%,

Beta = 0.9

Wd = Debt = 20%

rd = cost of debt = 8%

We = equity = 80%

Re = Rf + Beta (Rpm)

= 0.06 +0.9 (0.04)

= 0.096 * 100

= 9.6%

Unlevered Equity Cost ;

ReU= Wd × rd + We × re

= 0.20 × 8% + 0.80 × 9.6%

= 9.28%

Levered Equity Cost:

New Debt = 60%,

New Equity = 40%,

New rd = 9%

ReL = ReU + (ReU - rd) (D ÷ E)

= 9.28% + (9.28% - 9%) (0.60 ÷ 0.40)

= 0.097 * 100

= 9.7%

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Which continent has the highest concentration of trade (i.e., trade among countries within a particular region)?
Vesna [10]

Answer:

Europe

Explanation:

Europe as a continent has the highest concentration of trade. Europe comprises of almost more than 50 countries in itself. Right from early days, trade prospered in Europe and Atlantic Ocean, which stretches between Europe and America, remains the busiest ocean owing to this fact.

During times of colonization, spices and indigo were imported to Europe as the continent was one of it's highest consumers.

With the advent of European Union, trade further strengthened as a common currency in the form of Euro was established. This eased out the process of trade.

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4 years ago
Charley likes to have everything organized and she is bothered by the long list of documents on her flash drive. She wants to cr
Ilia_Sergeevich [38]

Answer:

File manager

Explanation:

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5 0
3 years ago
3. List and explain at least 3 strategies for successfully increasing diversity in the workforce.
Maksim231197 [3]

Answer: To include diversity within the work environment, the following actions can be developed:

1- Establish a policy at the level of human resources to hire a specific number of women, mens, nationals and foreigners.

2- Dedicate one or several days a year to show the different cultures that remain in the company.

3- Place signs in the work area such as walls, wallpapers on the work site inherent in diversity.

4 0
3 years ago
You are planning to retire 40 years from now. If your retirement account pays an annual rate of 6% compounded monthly and you st
fredd [130]

Answer:

  $800,579.28

Explanation:

The sum of the monthly payments can be found by the "annuity due" formula:

  A = P(1 +n/r)((1 +r/n)^(nt)-1)

where P is the monthly deposit, r is the annual interest rate, n is the number of times per year it is compounded, and t is the number of years.

For this problem, we have ...

  A = $400(1 +12/.06)(1(1 +.06/12)^(12·40)-1) = $400(201)(1 -1.005^480 -1)

  A = $800,579.28

The account balance after 40 years will be $800,579.28.

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3 years ago
Who is your bts bias?
jonny [76]
Ot7 ty for the pts!!!
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3 years ago
Read 2 more answers
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