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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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esse Pinkman is thinking about trading cars. He estimates he will still have to borrow ​$31,000 to pay for his new car. How larg
MA_775_DIABLO [31]

Answer:

Jesse's monthly car loan payment has to be $2,716.75.

Explanation:

Jesse's monthly car loan payment can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PV = Present value or amount to borrow = $31,000

P = Monthly car loan payment = ?

r = Monthly interest rate = APR / Number of months in a year = 9.4% / 12 = 0.094 / 12 = 0.00783333333333333

n = Number of months = Number of year * Number of months in a year = 1 * 12 = 12

Substitute the values into equation (1) and solve for P, we have:

$31,000 = P * ((1 - (1 / (1 + 0.00783333333333333))^12) / 0.00783333333333333)

$31,000 = P * 11.4106954292971

P = $31,000 / 11.4106954292971 = $2,716.75

Therefore, Jesse's monthly car loan payment has to be $2,716.75.

8 0
4 years ago
Suppose you want to invest $10,000. You have two options: Option #1: Invest in municipal bonds with an expected return of 8.00%,
Katyanochek1 [597]

Answer: 20%

Explanation:

Municipal Bonds are generally not taxed so if you invest in the Municipal bond, the tax rate does not affect you.

The tax rate therefore that will make you indifferent between the 2 options is the one that will take the Corporate bond returns of Jefferson to 8% so that both bonds may give you the same return after tax.

Assuming that tax rate is 'x' then,

8 = 10 (1 - x)

8 = 10 - 10x

10x = 10 - 8

10x = 2

x = 20%

At a tax rate of 20%, the Corporate bonds give an 8% return.

8 0
3 years ago
To find the net worth of a company, liabilities are subtracted from assets true or false
beks73 [17]

Answer:

To find the net worth, subtract the liabilities from the assets

Explanation:

6 0
3 years ago
____________ contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier and tende
Helen [10]

Answer: Destination Contract.

Explanation:

Destination Contract is a contract for the sale of goods, in which the seller is required or authorized to ship the goods by carrier and tender delivery of the goods at a particular destination.

The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract.

The seller bears the risk of loss until he completes his delivery requirements as stated under the destination contract. If the goods are destroyed or damaged while in transit to buyer, the seller bears the loss.

After the delivery company has delivered the goods at the buyer’s location, then the seller is no longer liable for any damages after that.

5 0
3 years ago
Jabari is power washing houses for a summer job. for every job, he charges an initial fee plus \$30$30dollar sign, 30 for each h
barxatty [35]

f(t) = 50 + 30t

Step-by-step explanation:

Let,Jabari total fee = f (in dollars) and the time taken per hour = t

Let, the initial fee charged = x dollars.

It is given that, $30 is charged per hour for his work.

As, the total fee charged for 4 hour job is 170.

We get the equation,

Initial fee + 30 × 4 = 170

i.e. x + 120 = 170

i.e. x= 170 - 120

i.e. x = 50

Thus, the initial fee is $50

So, Jabari's total fee is given by,

f(t) = Initial fee + 30 × Fee per hour

i.e. f(t) = 50 + 30t

Hence, the function formula for the given situation is f(t) = 50 + 30t.

What is Function formula ?

function, in mathematics, an expression, rule, or law that defines a relationship between one variable (the independent variable) and another variable (the dependent variable).

If a variable y is so related to a variable x that whenever a numerical value is assigned to x, there is a rule according to which a unique value of y is determined, then y is said to be a function of the independent variable x.

This relationship is commonly symbolized as y = f(x)—which is said “f of x”—and y and x are related such that for every x, there is a unique value of y. That is, f(x) can not have more than one value for the same x. To use the language of set theory, a function relates an element x to an element f(x) in another set. The set of values of x is called the domain of the function, and the set of values of f(x) generated by the values in the domain is called the range of the function.

Learn more about function formula use :

brainly.com/question/20317632

#SPJ4

3 0
1 year ago
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