Answer:
WACC = 0.10890 or 10.890%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure which contain either one or more of the following namely debt, preferred stock and common equity.
For a firm containing only two components namely debt and common equity, the formula for WACC is,
WACC = wD * rD * (1-tax rate) + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
First we will calculate the weights of each component and the cost of equity.
Total value of common equity = 20 * 5 million = $100 million
Total value of debt = $50 * 780/1000 = $39 million
Total value of capital structure = 100 + 39 = 139 million
wD = 39 / 139
wE = 100 / 139
Using CAPM we calculate the cost of equity to be,
rE = 0.03 + 1.5 * (0.1 - 0.03) = 0.135 or 13.5%
WACC = 39/139 * 0.07 * (1 - 0.4) + 100/139 * 0.135
WACC = 0.10890 or 10.890%
Answer:
Net income= $33 million
Explanation:
A leveraged buyout is a buyout of an entity by it's own managers/board members mostly through debt financing. Now the expected sales after the buyout is 500 million, we are asked to calculate net income only in the first year. First of all lets see what net income is. Net income is the remaining amount of income after having paid all the expenses which is mostly the residual income available for either distribution to shareholders or transfer to retained earnings.
The formula for net income is as follows:
Net income/profit= Sales revenue - COGS - Administrative expenses- depreciation and amortization - Interest expense - Tax
Let first calculate COGS & other administrative expense, depreciation and interest expenses first.
COGS & ADMIN: 500*0.6=300 m
Depreciation: 500*0.05 =25m
Interest expense for the year: 1500 * 0.08= 120m
Now lets substitute values in the formula mentioned above:
Income before taxes: 500m - 300m - 25m - 120m
Income before taxes: 55m
Income after taxes; 55m - 22m (taxes= 55*40%)
Net income= $33 million
Answer:
$ 7
Explanation:
You can solve it using Proportion
<span>GI Bill contributed to the growth of professional and white-collar jobs </span><span>by granting US veterans benefits to attend universities. The answer is C. </span>