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forsale [732]
3 years ago
5

Suppose the Simmons Co's common stock has a beta of 1.37, the risk-free rate is 3.4 percent, and the market risk premium is 8.2

percent. The yield to maturity in the firm’s bonds is 7.6 percent and the debt-equity ratio is .45. What is the RWACC if the tax rate is 34 percent?
Business
1 answer:
notsponge [240]3 years ago
8 0

Answer:

WACC 0.1030590%

Explanation:

<u>First we use CAPM to solve the Cost of Equity</u>

Ke= r_f + \beta (r_m-r_f)  

risk free 0.034

market rate  

premium market market rate - risk free 0.082

beta(non diversifiable risk) 1.37

 

Ke= 0.034 + 1.37 (0.082)  

Ke 0.14634

<u />

<u>Then we calculate the WACC</u>

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

Ke 0.14634

Equity weight 0.55

Kd 0.076

Debt Weight 0.45

t 0.34

WACC = 0.14634(0.55) + 0.076(1-0.34)(0.45)

WACC 0.1030590%

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A landowner owned a large piece of property containing an inn and a bakery. She entered into a contract to sell the property to
pickupchik [31]

Answer:

The most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

Explanation:

When there isn't a statute, the buyer bears the risk of loss when property subject to a contract for sale is destroyed without fault of any party prior to the date specified for closing. Unless the contract specifies otherwise, the buyer must pay the contract price even if the property is damaged by fire.

The inn was burned down in this case after the landowner and the buyer signed a contract for the sale of the property, but before the closing date. The contract appears to be silent on the risk of loss, and no appropriate statute exists. As a result of the common law rule, the buyer bears the risk of loss. Therefore, the landowner has the right to particular execution of the contract, which implies that the entire stipulated contract price must be paid by the buyer.

Regardless of the property's drop in worth owing to the fire, the $1 million contract price must be paid by the buyer because he bears the risk of loss.

Therefore, the most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

6 0
2 years ago
you lend a friend 10,000 dollars for which your friend will repay you 27,027 dollars at the end of 5 years. What interest rate a
Step2247 [10]

Answer:

The interest rate is "21.999%".

Explanation:

The given values are:

Amount lent,

= 10,000

Amount repaid,

= 27,027

Years (n),

= 5

As we know,

⇒  Amount \ repaid = Amount \ lent\times (1+r)^n

On substituting the given values, we get

⇒                27,027=10,000\times (1+r)^5

⇒                  \frac{27,027}{10,000}=(1+r)^5

⇒                 2.7027=(1+r)^5

⇒                 1+r = (2.7027)^{(1/5)}

⇒                 1+r=1.21999

On subtracting "1" from both sides, we get

⇒          1+r-1=1.21999-1  

⇒                      r=0.21999

i.e.,

⇒                      r=21.999 \ percent

5 0
3 years ago
What year began the worst economic recession since the great depression?.
Kamila [148]
2007 to the year of 2009
4 0
2 years ago
Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an org
notsponge [240]

Answer: Promotion

Explanation:

 The promotion is one of the important business strategy that helps in spread the awareness among the customers or users about the various types of brands and products by an organization.

The main objective of a promotion is to communication with the consumers so that they can aware about the various types of new brands and the product in the market as it helps in increase the probability of the business.    

 According to the given question, the communication helps in maintaining the relationship with the customers and the audience in an organization that helps in accept the products positively. Therefore, promotion is the correct answer.  

5 0
3 years ago
Making selection decisions by subjectively combining sources of information according to the general impression of the hiring sp
adelina 88 [10]
This is often referred to as the clinical approach. The clinical approach is also known as the threshold approach to clinical decision making. This approach combines rational and quantitative information with a general approach to decision making. In this situation, say you were hiring a new employee, a person using the clinical approach would look at their resume in how they match up with numbers and on paper to the candidate their looking for but also who they are as a person in a general sense. 
7 0
2 years ago
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