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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%

You might be interested in
Feeney Furniture prepared the following sales budget: Month Cash Sales Credit Sales March $19,000​ $11,000​ April $40,000​ $11,0
marusya05 [52]

Answer:

total cash collections in June = $101050

so correct option is A. $101,050

Explanation:

given data

month              cash sales                    credit sale

march                $19,000                        $11,000

April                   $40,000                       $11,000

May                    $43,000                       $35,000

June                   $59,000                       $50,000

to find out

total cash collections in June at Feeney Furniture

solution

we find here total cash collections in June that is express as

total cash collections in June = cash sale in June  + ( credit sale in June × 62% ) + ( credit sale in May × 30%) +  ( credit sale in April × 5%)   .............1

put here value we get

total cash collections in June = $59000  + ( $50000 × 62% ) + ( $35000 × 30%) +  ( $11000 × 5%)

total cash collections in June = $101050

so correct option is A. $101,050

8 0
3 years ago
Read 2 more answers
Xavier and alex plan on retiring 27 years from today. at that time, they plan to have saved the same amount. javier is depositin
hammer [34]

The amount by which Alex's deposit amount vary from Javier's if Alex also makes a deposit today, but earns an annual interest rate of 6.2 percent is $3381.39.

<h3>How to calculate the value?</h3>

We use the formula:

A=P(1+r/100)^n

where

  • A=future value
  • P=present value
  • r=rate of interest
  • n=time period.

Hence future value Javier will be:

=$15000*(1.052)^27

=$58,954.40

For Alex:

58,954.40=P*(1.062)^27

P=58,954.40/(1.062)^27

=$11618.61

Hence difference will be:

=15000 - 11618.61

= $3381.39

Learn more about interest on:

brainly.com/question/2294792

#SPJ1

3 0
1 year ago
You've told Dan, a new contact, that you're looking for a qualified sales representative. Now you want to find out if there's an
kenny6666 [7]
The answer is B give him your business card
8 0
3 years ago
Goliath Corp. has beginning accounts receivable of $2,000. During the year, Goliath sold goods to customers on account for $10,0
pishuonlain [190]

Answer:

$12,000

Explanation:

According to the accrual accounting method, the reporting of the transactions should be performed on an accrual basis which means whether or not the payment is paid but it is reported in the account books.

The revenue should be recorded when it is earned or realized and the expenses are recorded when it is incurred

So, in the given scenario, the amount based on accrual basis sales would be

= Goliath sold goods to customers on account + Goliath also sold goods to customers for cash

= $10,000 + $2,000

= $12,000

3 0
3 years ago
Logan purchased a rental home and lot for $150,000. Her expenses totaled $5,000. Lots in the area sell for approximately $10,000
lana [24]

Answer:

The correct response is "145,000 ".

Explanation:

The given values are:

Purchased cost,

= $150,000

Expenses,

= $5,000

Selling cost,

= $10,000

Now,

Logan's basis for depreciation will be:

= Purchased \ cost+Expenses-Selling \ cost

On putting the values, we get

= 150000+5000-10000

= 155000-10000

= 145,000 ($)

3 0
2 years ago
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