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boyakko [2]
3 years ago
6

570,000. The firm will raise the $570,000 in capital by issuing $230,000 of debt at a before-tax cost of 11.1%, $20,000 of prefe

rred stock at a cost of 12.2%, and $320,000 of equity at a cost of 14.7%. The firm faces a tax rate of 25%. What will be the WACC for this project? (Note: Round your intermediate calculations to three decimal places.)
Business
1 answer:
exis [7]3 years ago
3 0

Answer:

WACC = 12.040%

Explanation:

WACC represents weighted average cost of all sources of financing. In the question there are three sources of finance 1) Equity 2) Preferred Stock 3) Debt.

1) Equity: The firm intends to raise $ 320,000 from equity out of total financing of $ 570,000 e.g. 56% of total financing comes from Equity. Thus multiplying the cost of equity 14.7% (given) with ratio of equity financing, we get to weighted average cost of equity of 8.253%.

2) Debt: The firm is raising $ 230,000 from debt e.g. 40% of total financing. The proportion of debt is multiplied by post tax cost of debt as the interest expense is deductible expense for tax purposes in most of the jurisdiction. Therefore we reduce the cost of debt with element of (1 - tax rate), thus we get to 8.325% = 11.1 (1 - 25%) as total cost of debt. In order to get weighted average cost of debt we multiply this post tax cost of debt with ratio of debt financing 40%, thus weighted average cost of debt is 8.325 * 40% = 3.359%

3) Preferred Stock: The firm is also raising finance from preferred stock having cost of 12.2%. Proportion of financing from preferred stock is 4% in total mix of financing, thus weighted average cost of preferred stock is 12.2% * 4% = 0.428%.

Now adding weighted average cost of all three sources of funding, we get WACC: 8.253% + 3.359% + 0.428% = 12.040%

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Dan signs a check payable to Eagle Investors, Inc., and gives it to Eagle, leaving the amount blank but authorizing Eagle to fil
34kurt

Answer:

$1,500

Explanation:

Based on the information given we were told that Eagle fills in the amount of $1,500 instead of the amount of $1,000 which Dan authorize Eagle to fill in which they went ahead to as well negotiates the check payable to First State Bank because Eagle owes First State Bank the amount of $1,500 which means that First State Bank which is an HDC, can enforce the check for the amount of $1,500 which was negotiated by Eagle to First State Bank.

Therefore First State, an HDC, can enforce the check for: $1,500

8 0
3 years ago
Winston Co. had two products code named X and Y. The firm had the following budget for August:
xenn [34]

Answer:

a. $90,000 favorable

Explanation:

Calculation for what The selling price variance for Product Y is

First step is to calculate the Actual price

Actual price:M=$540,000 ÷ 9,000

Actual price= $60

Now let calculate the selling price variance

Selling price variance=($60 - $50) × 9,000

Selling price variance=$10×9,000

Selling price variance=$90,000 favorable

Therefore The selling price variance for Product Y is $90,000 favorable

5 0
3 years ago
Managerial accounting information Question 48 options: A) pertains to the entity as a whole and is highly aggregated. B) is cons
KengaRu [80]

Answer:

The correct answer is letter "D": pertains to sub-units of the entity and may be very detailed.

Explanation:

Managerial Accounting is<em> internally-based accounting</em> that helps managers measure the results of their decisions. This is in contrast to financial accounting which emphasizes more general, higher-level financial results. One common managerial accounting tool is determining the <em>profit margin in each of the company's products</em>. This information helps managers set product prices and ensure that they are making appropriate profit margins.

7 0
3 years ago
Financial statement data for years ending December 31 for tango company follow
maxonik [38]

The inventory turnover for Tango company are: 4.8, 5.3.

<h3>Inventory turnover</h3>

Using this formula

Inventory Turnover = Cost Of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)

20Y7

Inventory Turnover =$3,864,000 /($770,000+$840,000)/2

Inventory Turnover=$3,864,000/$805,000

Inventory Turnover=4.8

20Y6

Inventory Turnover = $4,001,500 /($740,000+$770,000)/2

Inventory Turnover= $4,001,500 /$755,000

Inventory Turnover=5.3

Therefore the inventory turnover for Tango company are: 4.8, 5.3.

The complete question is:

Financial statement data for years ending December 31 for tango company follow

20Y7  20Y6

Cost of goods sold $3,864,000  $4,001,500

Inventories:

Beginning  of year 770,000  740,000

End of year  840,000  770,000

Determine the turnover for 20Y7 and 20Y6.

Learn more about inventory turnover here:brainly.com/question/18914383

#SPJ1

8 0
2 years ago
The name group of explorers that Louiseana purcha
sdas [7]
It was called the “ Lewis and Clark Expedition” or “ The Crops Of Discovery”. Hopefully this helped!!
4 0
3 years ago
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