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nadezda [96]
3 years ago
9

A firm has zero debt in its capital structure. Its overall cost of capital is 8%. The firm is considering a new capital structur

e with 50% debt. The interest rate on the debt would be 5%. Assuming that the corporate tax rate is 40%, and all else is equal. including its risk profile, what would be its new cost of equity?
Business
2 answers:
Oxana [17]3 years ago
5 0

Answer:

 9.8%        

Explanation:

Formula;

Ke=overall cost of capital+(1-.4)(Overall cost of capital-cost of debt)

Where Ke= Cost of equity

overall cost of capital=8%

cost of debt=5%

Ke=8%+(1-.4)*(8%-5%)

Ke=8%+(1.8%)

Ke=9.8%

madam [21]3 years ago
4 0

Answer: 9.8%

Explanation:

Because rs = 8 + (1 - .4)(1)(8-5) = 8 + 1.8 = 9.8%

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George Corporation had the following transactions occur in the current year: 1. Cash sale of merchandise inventory. 2. Sale of d
timurjin [86]

Answer: Three items will appear being;

2. Sale of delivery truck at book value

5. Sale of a debt security held as an available-for-sale investment

6. Collection of loan receivable.

Explanation:

The Investment Section of the Cash Flow Statement contains activities related to investment such as the buying or selling of fixed assets and the buying or selling of other company stocks or bonds.

Out of the above therefore, there are 3 activities that would fall under this section of the Cash Flow Statement.

They are;

2. Sale of delivery truck at book value.

- This refers to the sale of a Fixed asset and as such it goes to the investment section.

5. Sale of a debt security held as an available-for-sale investment.

- As a debt security of another firm that was considered available for sale, this goes to the Investment Section as well.

6. Collection of loan receivable.

- Finally, collection of loan receivable means that the company loaned money to another company making it an investment related cash inflow as it is a long term Investment income source.

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3 years ago
Last season at City Opera House, far more people attended opera X than opera Y. However, opera Y generated far greater net profi
ryzh [129]

Answer:

c. a difference in the subject matters of operas X and Y

Explanation:

All factors could directly explain the fact that opera Y generated far greater net profits that did opera X except for this one. Although the subject matter might have some impact on sales, it could not do so in a direct way. It could only do so if we take other factors into account, such as the cost of producing a particular opera or the interest that people have on an opera (which results in greater or lesser ticket sales).

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The feed that Luca exports from his point of sale system needs some cleanup before it will be accepted by Google Merchant Center
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Answer: To meet the requirements, he needs to constantly change product state to condition in his exported feed. The best way to do this each time: <u><em>Submit his feed without changing it, and then use feed rules to automatically change product state to condition.</em></u>

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The listing and selling brokers agree to split a 7% commission fifty-fifty on a $96,900 lot sale. The listing broker is on a 30%
Sergio039 [100]

Answer:

1,187.03

Explanation:

he listing and selling broker each get 50% of the 7 5 commission.

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Each broker gets   =3,391.5

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=35/100 x 3,391.5

=1,187.025

=1,187.03

5 0
3 years ago
Trey has two dependents, his daughters, ages 14 and 17, at year-end (2018). Trey files a joint return with his wife.What amount
Ipatiy [6.2K]

Answer:

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6 0
3 years ago
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