1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
cestrela7 [59]
3 years ago
5

Charlotte's Crochet Shoppe has 12,200 shares of common stock outstanding at a price per share of $68 and a rate of return of 11.

33 percent. The company also has 370 bonds outstanding, with a par value of $1,000 per bond. The pretax cost of debt is 5.99 percent and the bonds sell for 95.1 percent of par. What is the firm's WACC if the tax rate is 39 percent?
Business
1 answer:
DENIUS [597]3 years ago
8 0

Answer:

9.04%

Explanation:

The computation of firm's WACC is shown below:-

MV of equity = Price of equity × Number of shares outstanding

= $68 × 12,200

= $829,600

MV of Bond = Par value × bonds outstanding × Percentage of par

= $1,000 × 370 × 0.951

= $351,870

MV of firm = MV of Equity + MV of Bond

= $829,600 + $351,870

= $1,181,470

After tax cost of debt = Cost of debt × (1 - Tax rate)

After tax cost of debt = 5.99 × (1 - 0.39)

= 3.6539

Weight of equity = MV of Equity ÷ MV of firm

= $829,600 ÷ $1,181,470

=0.7022

Weight of debt = MV of Bond ÷ MV of firm

= $351,870 ÷ $1,181,470

= 0.2978

WACC = After tax cost of debt × Weight of debt + Cost of equity × Weight of equity

= 3.65 × 0.2978 + 11.33% × 0.7022

= 9.04%

You might be interested in
Unearned fees appear on the a.income statement as revenue b.balance sheet in the current assets section c.balance sheet in the o
ZanzabumX [31]

Answer:

The answer is D. balance sheet as a current liability

Explanation:

Unearned fee is the amount that has been collected before rendering a service. For example, a customer paid in advance for goods that have been delivered, a football season ticket holder. The full service has not been rendered. So it is recognized as a liability because the customer can terminate the contract anytime.

As the service is being rendered, maybe monthly, quarterly or weekly, revenue is recognized and unearned fee decreases.

For example, a customer paid a $12,000 on Jan 1. for monthly delivery of magazine for a year. Here, the customer paid for a service that last till Dec 31st.

What will be recognized as revenue monthly is $1,000($12,000/12months) and unearned revenue too decrease by $1,000 monthly

4 0
3 years ago
Ramiro has been a forklift driver for the local grocery store for six years. He earns $32,000 a year. He works with a nice crew.
laiz [17]

Answer:

social context

Explanation:

Social context -

It refers to the physical environment in which the people live , is referred to as the social context  .

It is also known as the sociocultural context or social environment  .

Social context consists of all the living as well as non living things , the people living in the society have certain impacts from the outside environment , which can be good as well as bad .

In the given scenario of the question ,

Ramiro has very positive impact from the social context , and hence he is very satisfied and happy with his job .

5 0
3 years ago
One current consumer trend is consumers who allow others to borrow a good or service for a small fee, usually done on an on-line
aev [14]

One current consumer trend is consumers who allow others to borrow a good or service for a small fee, usually done on an on-line platform. this is referred to as Sharing Economy.

The sharing economy is an economic model defined as peer-to-peer (P2P)-based activities of obtaining, providing, or sharing access to goods and services, often facilitated through online community-based platforms.

Under capitalism, the sharing economy is a socio-economic system built around the sharing of resources. It often involves a way of purchasing goods and services that differs from the traditional business model of a company that employs people to manufacture the products it sells to consumers.

Learn more about Sharing Economy here: brainly.com/question/28050979

#SPJ4

6 0
2 years ago
When discussing time-value-of-money it is necessary to understand some key terminology. Which of the following terms refers to a
Elanso [62]

Answer:

C. Ordinary annuity

Explanation:

The ordinary annuity is the sequence amount of an equivalent lump sum containing a fixed amount of money to be paid or earned at the end of each term. Periods here can be in weekly, monthly, semi-annual or semi-annual, or annual. The number should be the present value

Thus, the appropriate choice is c.

Therefore, all the remaining options are wrong

5 0
3 years ago
Tonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (23,000) Long-te
bekas [8.4K]

Answer:

D) $50,000

Explanation:

Tonya's adjusted gross income = salary + long term capital gains = $45,000 + $5,000 = $50,000

Non-business bad debt is unrelated to the person's business, and must be totally worthless in order to be deducted. In this case, Tonya deducted the non-business bad debt last year, so it doesn't affect this year's AGI.

6 0
3 years ago
Other questions:
  • Jake is a sales representative for General Mills. Each week he uploads his plans for visiting clients out in the field to a rout
    15·1 answer
  • A. 17.2, B. 15.12 C.12% D. 18.7%
    9·1 answer
  • The richest 20 percent of the families in the united states receive approximately ______ percent of total income.
    10·1 answer
  • Differences between open opportunity legal equality and free contract
    12·1 answer
  • A firm has an outstanding issue of 1,000 shares of preferred stock with a $100 par value and an 8 percent annual dividend. The f
    12·1 answer
  • After the Interview The job search doesn't end with the interview. After your interview, be sure to follow up with the appropria
    7·1 answer
  • The FASAB’s Statement of Accounting and Reporting Concepts Statement No. 1 identifies four objectives of federal financial repor
    7·1 answer
  • Some years ago, the three leading aluminum producers in the U.S. changed prices nine times by exactly the same amount each time
    6·1 answer
  • Parker Corp., which operates on a calendar year, expects to sell 3,000 units in October, and expects sales to increase 10% each
    12·1 answer
  • Sally opened her own business and resigned from a job paying $25,000 per year. Her savings acccount pays 8% interest, but she wi
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!