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sashaice [31]
3 years ago
5

Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent.

The firm has 6,000 shares of 7 percent preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $350,000 and currently sells for 102 percent of face. The yield to maturity on the debt is 8.49 percent. What is the firm's weighted average cost of capital if the tax rate is 34 percent?
Business
1 answer:
Over [174]3 years ago
4 0

Answer:

The firm's weighted average cost of capital if the tax rate is 34 percent is 12.69%

Explanation:

total assets = common stock value + preferred stock value + debt

                   = 23000*57 + 6000*48 + 350000*102%

                   = 1956000

WACC

= (common stock value/total assets) * common stock rate of return

+ (preferred stock value/total assets) * preferred stock rate of return

+ (debt value/total assets) * yield to maturity of debt * (1-tax rate)

= (1311000/1956000)*14.2%  + (288000/1956000)*7%  + (357000/1956000)*8.49*(1 - 34%)

= 12.69%

Therefore, The firm's weighted average cost of capital if the tax rate is 34 percent is 12.69%

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In November 2016, General Motors produced a car that was delivered to a local dealership in December 2016. The auto was sold to
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Answer:

It will be counted as investment in 2016 and negative investment in 2017.

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Therefore, following national income accounting practices, the car would be counted as part of the investments and GDP of 2016, and negative investment in 2017, because that was the year in which it was produced.

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At what point in life should I using a checking account and why?
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3 years ago
Purple Rose Corporation reported pretax book income of $500,000.
Vikentia [17]

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Current income tax expenses at 34% will then be:

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5 0
3 years ago
In the securitization process, mortgages are pooled together and cash flows are packaged into securities to be sold in the secon
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Answer:

conduits

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Cheers

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3 years ago
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