Answer:
a) 12.87%
b) 11.03%
Explanation:
EBIT with no debt = $111,000
net income = $111,000 x (1 - 22%) = $86,580
total value of the firm with no debt = $86,580 / 12% = $721,500
value of the firm after debt is taken = $721,500 + ($165,000 x 22%) = $757,800
debt to equity ratio after debt is taken = $165,000 / ($757,800 - $165,000) = 27.834%
new cost of equity (Re) = 12% + [(12% - 8%) x 27.834% x (1 - 22%)] = 12.87%
WACC = (0.72166 x 12.87%) + (0.27834 x 8% x 0.78) = 9.288% + 1.737% = 11.025$ = 11.03%
Least to greasy would get you started look at the x and y axis two.
Answer:
$38,448,000
Explanation:
Calculation to determine What will the book value of this purchase
First step
Depreciation = (cost - salvage)/useful life
Depreciation= (40,900,000 - 4,090,000 )/15
Depreciation=36810000/15
Depreciation=2454000
Now let determine the
Book value=Cost -Depreciation
Book value=$40,900,000-$2,454,000
Book value=$38,448,000
Therefore the book value of this purchase is$38,448,000
Answer:
$857
Explanation:
Calculation for the present value
Using this formula
Present value = FV / (1+ r)^ n
Let plug in the formula
Present value= 1,000 / (1+.08)^2
Present value= 1,000 / (1.08)^2
Present value= 857.34
Present value=$857 (Approximately)
Therefore the Present value is $857