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4 years ago

5

The capital structure of Merritt Co. is 20% common equity and debt equal to 80%. The cost of common equity is 10% and the pretax

cost of debt is 5%. Merritt's tax rate is 21%. What is Merritt's weighted-average cost of capital?

1 answer:

olchik [2.2K]4 years ago

7 0

Answer:69

Explanation:

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Dove, Inc., had additions to retained earnings for the year just ended of $630,000. The firm paid out $105,000 in cash dividends

Andreas93 [3]

Answer:

(A) Earnings per share = $1.19 per share, Dividends per share = $0.17 per share, and book value per share is $11.69 per share

(B) Market-to-book ratio = 2.52 times, and the price-earnings ratio is 24.79 times

(C) Price-sales ratio is 1.73 times

Explanation:

(A) Earning per share = (Net income) ÷ (Number of shares)

where,

Net income = Retained earnings + dividend paid

= $630,000 + $105,000

= $735,000

And, the number of shares are 620,000 shares

Now put these values to the above formula

So, the value would equal to

= ($735,000) ÷ (620,000 shares)

= $1.19 per share

Dividend per share = (Total dividend) ÷ (number of shares)

= ($105,000) ÷ (620,000 shares)

= $0.17 per share

Book value per share = (Total equity) ÷ (number of shares)

= $7,250,000 ÷ (620,000 shares)

= $11.69 per share

(B) Market to book ratio = (Market price per share) ÷ (book value per share)

= $29.50 ÷ $11.69

= 2.52 times

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

= $29.50 ÷ $1.19

= 24.79 times

(C) Price sales ratio = (Market price per share) ÷ (Total sales per share)

where,

Total sales per share = (total sales) ÷ (Number of shares)

= (10,550,000) ÷ (620,000 shares)

= $17.01 per share

So, the price sales ratio = $29.50 ÷ $17.01

= 1.73 times

6 0

3 years ago

Cash flows It is typical for Jane to plan, monitor, and assess her financial position using cash flows over a given period, ty

svetlana [45]

Answer:

A.

TOTAL CASH INFLOW $4,950

TOTAL CASH OUTFLOW $4,357

B. $593

C. First is for Jane to bring down her outflow

Secondly is for Jane to either make use of a credit card or request for loan.

D. Jane should make use of the short-term investment rates of 5 percent which was offered by the bank and secondly in a situation where she think or felt that the surplus cannot be enough for her to invest with Jane should go ahead and save the money.

Explanation:

a. Calculation to Determine Jane’s total cash inflows and cash outflows

TOTAL CASH INFLOW

Interest received $ 450

Salary4,500

TOTAL CASH INFLOW $4,950

TOTAL CASH OUTFLOW

Clothes-$1,000

Dining out-500

Groceries-800

Auto payment-355

Utilities-280

Mortgage-1,200

Gas-222

TOTAL CASH OUTFLOW $4,357

Therefore total cash inflow will be $4, 950 while total cash Outflow will be $4,357

b. Calculation to Determine the net cash flowfor the month of August using this formula

The Net cash flow =Total cash inflow - Total cash outflow

Let plug in the formula

Net cash flow =$4,950-$4,357

Net cash flow = $593

Therefore the Net cash flow will be $593

c. In a situation where there is a shortage, the few options that will be open to Jane will be:

First is for Jane to bring down her outflow

Second is for Jane to either make use of a credit card or request for loan.

d. In a situation where there is a surplus, what should be a prudent strategy for Jane is to follow:

Jane should make use of the short-term investment rates of 5 percent which was offered by the bank and secondly in a situation where she think or felt that the surplus cannot be enough for her to invest with Jane should go ahead and save the money.

6 0

4 years ago

(26 pts) Motorola obtains cell phones from its contract manufacturer located in China to serve the U.S. market. The U.S. market

Pavlova-9 [17]

Answer:

when sea transportation is used:

safety stock = Z-score x √lead time x standard deviation of demand

Z-score for 99% = 2.58
lead time = 36 days
standard deviation of demand = 4,000 units

safety stock = 2.58 x √36 x 4,000 units = 61,920 units

reorder point = lead time demand + safety stock

lead time demand = 36 days x 5,000 units = 180,000 units
safety stock = 61,920

reorder point = 180,000 units + 61,920 units = 241,920 units

when air transportation is used:

safety stock = Z-score x √lead time x standard deviation of demand

Z-score for 99% = 2.58
lead time = 4 days
standard deviation of demand = 4,000 units

safety stock = 2.58 x √4 x 4,000 units = 20,640 units

reorder point = lead time demand + safety stock

lead time demand = 4 days x 5,000 units = 20,000 units
safety stock = 20,640

reorder point = 20,000 units + 20,640 units = 40,640 units

7 0

3 years ago

TopChop sells hairstyling franchises. TopChop receives $50,000 from a new franchisee for providing initial training, equipment,

Brut [27]

Answer:

$65,000

Explanation:

Under accrual method of accounting, the revenue is recognized when the same is accrued to the concern.

The revenue of $30,000 will be recognized from the starting on the date the franchise is purchased.

Hence, $30,000 will be recognized from July 1, 2021 upto to Dec 31, 2021 i.e. for half of the year.

Amount of revenue recognized by Top Chop in 2021 for its arrangement with Carlos:

= Amount receives from initial training + Amount receives from using name of the company

= $50,000 + ($30,000 ÷ 2)

= $65,000

3 0

3 years ago

Some economists believe that permanently lower marginal income tax rates __________ the incentive to work and thus shift the ___

gtnhenbr [62]

Answer:

The answer is "increase; LRAS curve to the right".

Explanation:

The curve LRAS represents the flow between all the level of wages and economic GDP supplied because all prices are fully flexible, also with nominal salaries; its cost may change all along LRAS, however, the output cannot, as it represents the complete output of workers, that's why the several economists say that lower marginal rate consistently increases the motivation to work, shifting the LRAS curve to the left.

6 0

3 years ago