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Nuetrik [128]
3 years ago
13

Alabaster Incorporated wants to be levered at a debt-to-value ratio of .6. The cost of debt is 9 percent, the tax rate is 35 per

cent, and the cost of equity for an all-equity firm is 12 percent. What will be Alabaster's cost of equity?
Business
1 answer:
ss7ja [257]3 years ago
5 0

Answer:

Return on Equity = 13.17%

Explanation:

We solve for cost of equity using the MM model with taxes.

r_e = r_a + \frac{D}{E} (r_a-r_d)(1-t)

r_a = retrun on asset or unlevered return =0.12

D/E = 0.60

r_d = cost of debt = 0.09

taxes = 35% = 0.35

re = return on equity = 0.1317 = 13.17%

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U.S. EEO rules forbid discrimination in terms and circumstances of employment on the basis of specified characteristics. As a result, "opportunities" can be found in a variety of employment circumstances, such as:

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8 0
1 year ago
Cycle​ Haven, Inc. offers warranties on all their bikes. They estimate warranty expense at​ 4.5% of sales. At the beginning of​
Aleks04 [339]

Answer:

$13,725

Explanation:

The movement in the warranty payable account over a period is as a result of the warranty expense for the period and the warranty payments made during the period.

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= 4.5% * $305,000

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3 years ago
As distribution manager, hassan is constantly gathering information about shipping rates, improvements in logistics analysis, an
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7 0
2 years ago
Mutual funds _____. a. are investment companies that use funds provided by savers to buy various types of financial assets, incl
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Answer:

a)

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7 0
3 years ago
Use the following information for Taco Swell, Inc., (assume the tax rate is 21 percent): 2017 2018 Sales $ 19,049 $ 18,918 Depre
marin [14]

Cash Flow from Assets:

Ending Balance of Assets in 2017...........................................................$77760

Add: Depreciation........................................................................................$2534

Less: Beginning Balance of Assets.........................................................($72884)

CashOut  Flow ..................................................................................................$7410

Cash flow to creditors

Ending Balance of Creditors...................................................................$6790

Less: Beginning Balance of Creditors.................................................$6299

Less: Purchases (From Inventory)........................................................$8184

Cash Flow to AP............................................................................................$7693


Purchases from Inventory:

Ending Balance of Inventory....................................................$21912

Add: Cost of Goods Sold................................................................$6781

Less: Beginning Balance of Inventory.....................................($20509)

Purchases......................................................................................$8184

Cash flow to stock holders:

While Preparing Accounting Equation for 2017 as below:

Assets-Liabilities=Eq Shareholders

113632-37233=$76399

While Preparing Accounting Equation for 2018 as below:

Assets-Liabilities=Eq Shareholders

122701-43835=$78866

Net Income for 2018

Sales                                 18918

Less:  Dep                         (2534)

Less: COGS                       (6781)

Less:Other Exp                  (1203)

Less: Interest                     (1350)

Net Income before tax     7050

Less Tax..............................(1480)

Net Income.....................5569.5

Beginning Balance of Shareholders...................................................$76399

Add: Net income....................................................................................$5569.5

Less: Dividend.........................................................................................($2364)

Less: Ending Balance...........................................................................($78866)

Cash to Shareholders........................................................................$738

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