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Darya [45]
3 years ago
13

Use the data provided on Cadbury to answer the question below. The risk free rate is​ 4.25%. The expected return on the market p

ortfolio is​ 9.75%. The corporate tax rate is​ 40%. The face value of​ Cadbury's outstanding bonds is 2.450 billion pounds sterling. The coupon rate on​ Cadbury's bonds is​ 4.5%. Assume that the bonds pay annual coupons. The yield to maturity on​ Cadbury's bonds is​ 4.5%. Cadbury's bonds mature in 7 years. Cadbury has 1.650 billion common shares outstanding. The market price of​ Cadbury's common shares as of Dec​ 31, 2008 is 6.25 pounds sterling.​ Cadbury's Beta is 0.8.​ Cadbury's cost of debt ​(afterminus ​tax) is​ 2.7%. Cadbury's cost of equity is​ 8.65%. What is​ Cadbury's WACC?
Business
1 answer:
Sladkaya [172]3 years ago
4 0

Answer:

7.51%

Explanation:

The formula to compute WACC is shown below:

= (Weightage of debt) × (after cost of debt) + (Weightage of  common stock) × (cost of common stock)

where,  

Weighted of debt = Debt ÷ total firm

The total firm includes debt, and the equity which equals to

= 2.450 billion × $ 1 + 1.650 billion × $6.25

= 2.450 billion + 10.3125 billion

= 12.7625 billion

So, Weighted of debt = ($2.450 billion ÷ $12.7625 billion) = 0.192

And, the weighted of common stock = (Common stock ÷ total firm)

                                                              = $10.3125 billion ÷ $12.7625 billion

                                                              = 0.808        

Now put these values to the above formula  

So, the value would equal to

= (0.192 × 2.7%) +  (0.808 × 8.65%)

= 0.5184% + 6.9892%

= 7.51%

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A. demographics

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"Demographics" refers to the groups that people can be separated in to based on different factors such as those listed (age, income, family size, occupation, etc).

3 0
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Brian recently had to have minor surgery that cost him $3,000. He used the $2,300 remaining in his HSA but will pay the rest out
Gala2k [10]

Answer: Brian will have $700 dollars to pay the medical bill balance

Explanation: You already know your total is $3,000. Subtract 3,000 - 2,300, which will give you $700.00

4 0
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What do you do if your lender rejects your loan application
Dima020 [189]

Answer:you tie a noose and hope for the best my friend. and if all goes south, you have a backup plan.

Explanation:

8 0
3 years ago
Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of
ANEK [815]

Answer:

Total estimated bad debts = $9,400

Explanation:

days outstanding     A/c Receivable    %        estimate

0-30                           $77,000              1           $770

31-60                          $46,000              4         $1,840

61-90                           $39,000              5        $1,950

91-120                          $23,000              8         $1,840

over 120                      $15,000               20       $3,000

Total                            200,000                          $9,400                      

4 0
2 years ago
Read 2 more answers
Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overh
aalyn [17]

Answer:

$1,287  unfavorable

Explanation:

According to the scenario, computation of the given data are as follow:-

But before that we need to calculate the following things

Total Budgeted Fixed Cost

= Supervision Fixed Cost + Utilities Fixed Cost + Factory Depreciation Fixed Cost

= $15,510 + $14,800 + $59,780

= $90,090

Budgeted Fixed Manufacturing Overhead Rate

= Total Budgeted Fixed Cost  ÷ Original Budgeted Machine Hours

= $90,090 ÷ 7,700 hours

= $11.7

Based on the above calculation, the overall fixed manufacturing overhead volume variance is

= Budgeted Fixed Manufacturing Overhead Rate × (Original Budgeted Machine Hours - Actual Output of Month Totaled)

= $11.7 × (7,700 hours - 7,590 hours)

= $11.7 × 110

= $1,287  unfavorable

According to the analysis, the overall fixed manufacturing overhead volume variance for the month is $1,287

8 0
3 years ago
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