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Vesnalui [34]
3 years ago
6

PAW Industries has 5 million shares of common stock outstanding with a market price of $8.00 per share. The company also has out

standing preferred stock with a market value of $10 million, and 100,000 bonds outstanding, each with face value $1,000 and selling at 96% of par value. The cost of equity is 19%, the cost of preferred is 15%, and the cost of debt is 9%. If PAW's tax rate is 34%, what is the WACC?A. 10.14%B. 10.38%C. 12.51%D. 14.33%`
Business
1 answer:
AlladinOne [14]3 years ago
3 0

Answer:

A. 10.14%

Explanation:

1.Market value of PAW common stock:5,000,000*8=$40,000,000

2.Market value of PAW outstanding preferred stock=$10,000,000

3.Market value of PAW bonds outstanding=96,000,000(100,000*1000*96%)

Total Market value(1+2+3)=146,000,000

4.Cost of equity amount on common stock(19%*40,000,000)=7,600,000

5.Cost of preferred stock amount (15%*10,000,000)=$1,500,000

6.After tax cost of Debt amount(9%*66%*96,000,000)=$5,702,400

Total cost amount(4+5+6)=14,802,400

The WACC can be calcualted as: Total cost amount/Total market value

                                                        14,802,400/146,000,000=10.14%

The answer should be A. 10.14%

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Answer:

Explanation:

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2.

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Cost 3250000 4125000 875000 [4125000-3250000]

Activities 50000          75000   25000

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Fixed cost=4125000-75000*35=1500000

Variable cost=35

cost formula for maintenance= 1500000+35b

3.

Indirect Material (variable) 100*70000 = 7000000

Rent Fixed                      6000000

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2 years ago
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Answer: Option C            

                           

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Hence anything that is offered to the market and has the ability to satisfy the needs of specified individuals will be classified as a product.

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Mark Paxson maintains that the statement of cash flows is an optional financial statement. Do you agree? Explain.
AlekseyPX

Answer:

I Disagree

Explanation:

The statement of cash flows is of extreme importance for a company and its stakeholders (especially investors). It shows how activities affecting the balance sheet and the financial statement also affect cash and cash equivalents, and while it is true that the balance sheet has an account under that name, it does not provide enough detail.

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The current sections of Pearl Corp.’s balance sheets at December 31, 2021 and 2022, are presented here. Pearl Corp.’s net income
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Answer:

$299,200

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Net Income 279,400

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6 0
3 years ago
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