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sashaice [31]
3 years ago
13

Assume Time Warner shares have a market capitalization of $60 billion. The company is expected to pay a dividend of $0.30 per sh

are and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 35%, compute the WACC
Business
1 answer:
den301095 [7]3 years ago
3 0

Answer:

WACC = 7.2%

Explanation:

<em>Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund</em>

To compute the WACC , we will follow the steps below:

Step 1

<em>Calculate the cost of the individual sources of finance:</em>

Cost of debt =   Before-tax deb × (1-T)

                    = 8% × (1-0.35)

                    = 5.2%

Cost of equity = (Do(1+g)/Po ) + g

                        = (0.30 (1+0.07)/ 40)   + 0.07

                        = 7.8%

Step 2

<em>Calculate the market value of the individual sources of finance</em>

Equity = $60 billion  

Debt = $20 billion

Step 3

<em>Calculate WACC</em>

            =  7.8% × 80 billion = 4.6815

            =    5.2% ×  $ 20 billion = 1.04

Total value of debt and equity = 60 + 20 = $80 billion

WACC =  (4.68  + 1.04)/ 80 × 100

         = 7.2%

WACC = 7.2%

               

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Answer:

False

Explanation:

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The statement is false.

7 0
3 years ago
or due to his success at his current company in getting several new patents. This is an example of ________ capital.
Ket [755]

Complete Question:

Cesar was being recruited by a competitor due to his success at his current company in getting several new patents. This is an example of ________ capital.

Group of answer choices

A) social

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E) financial

Answer:

D) intellectual

Explanation:

In this scenario, Cesar was being recruited by a competitor due to his success at his current company in getting several new patents. Therefore, this is an example of intellectual capital because he was recruited based on his intangible assets which made him excel or succeed.

An intellectual capital can be defined as the value or intangible assets such as skills, copyright, trademarks, experience, patents, knowledge provided by the employees working in an organization and thus, giving the organization a competitive advantage over their rivals in the same industry, as well as earn more profits, increase their customer base and creation of quality products.

5 0
3 years ago
There is conflict and distrust in the team. Glen, the team leader, doesn't think the team members are working enough. The team m
iogann1982 [59]

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Explanation:

<u>Conflict in the workplace is inevitable and is a painful reality and is the major reason   for poor productivity and frustration among the employees.If conflict is managed in a proper way it can lead to increase in employees productivity.The strategist that can be used are:-</u>

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Understanding/listening  both the side of the story before resolving the conflict is very important

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Not Due $1,00,000.00    1%                                   $1,000.00

1 to 30 $38,000.00           2%                                      $760.00

31 to 60 $17,000.00          4%                                       $680.00

61 to 90 $14,000.00            6%                                  $840.00

over 90 $16,000.00          10%                               $1,600.00

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An account may be the document in a gadget of accounting wherein a business records debits and credits as proof of accounting transactions. as a consequence, the bills receivable account shops information approximately billings to customers, as well as reductions of those billings due to payments from clients.

3 specific types of debts in accounting are actual, private, and Nominal Accounts. the real account is then categorized into subcategories – Intangible real account, Tangible actual account. additionally, 3 distinct sub-forms of non-public accounts are natural, representative, and synthetic.

Learn more about accounts here: brainly.com/question/25746199

#SPJ4

5 0
1 year ago
The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000, plus a bonus
Pavel [41]

Answer:

The correct answer is C: Bonus= $24000

Explanation:

The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000, plus a bonus of 20 percent of income after deduction of the salary allowance.

The formula to calculate the bonus is:

Bonus=0,20*(Income-salary)

If income is $150000

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8 0
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