1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
timofeeve [1]
3 years ago
6

Western Electric has 21,000 shares of common stock outstanding at a price per share of $61 and a rate of return of 15.6 percent.

The firm has 11,000 shares of $8 preferred stock outstanding at a price of $48 a share. The outstanding debt has a total face value of $275,000 and currently sells for 104 percent of face. The yield to maturity on the debt is 8.81 percent. What is the firm's weighted average cost of capital if the tax rate is 35 percent?
a. 14.37 percent
b. 14.52 percent
c. 14.19 percent
d. 13.92 percent
e. 13.44 percent
Business
1 answer:
zheka24 [161]3 years ago
4 0

Answer: = b = 14.52%

Explanation:

Amount of common equity(E) =21000 × 61 = $1,281,000

Amount of preferred shares (P) = 11000 × 48 = $528,000

Amount of debt (D) = 1.04 × 275000 = $286,000

Total amount = $2,095,000

WACC formula is given below

WACC = wE × rE + wP × rP + wD × rD(1-tax)    

where w = weight of shares or stocks

r = cost of shares

wE = 1,281,000 / 2,095,000 = 0.6115

rE = 15.6%

wP = 528,000 / 2,095,000 = 0.2520

rP = Dividend/Price = (8/48) = 0.1667 or 16.67%

wD = 286,000 / 2,095,000 = 0.1365

rD = 8.81%

Now, put in these values to the formula;

WACC = (0.6115 × 0.156 ) + (0.2520 × 0.1667) + [ 0.1365 × 0.0881 × (1-0.35) ]

= 0.0954 + 0.0420 + 0.00782

= 0.1452 or 14.52%

Hence WACC is therefore 14.52%

You might be interested in
Which of the following statements is (are) false?(A) Operations costing accounts for material costs like job costing and convers
Airida [17]

Answer:

C. Both A and B

Explanation:

Operation Costing:

is the acccount of process costing until there is a split-point when the costing systems moves to job system.

This means the materials are calculate with calculate with process costing. And then there is a degree of customization which makes the job costing useful.

(A) FALSE is the other way around. The system use process costing until split point, when it switch to job costing for specific procedures.

(B) FALSE

An automobile manufacturer do the same car over and over.

There is no difference between the car. It will use process costing.

6 0
3 years ago
Which of the following is used by a seller to deceive a buyer? a. Bait and switch b. Contest c. Display d. Introductory offer Pl
Inessa [10]

That which is used by a seller to deceive a buyer is: a. Bait and switch

Bait and switch is a tactic that is used by entrepreneurs to attract customers. They tell them to purchase a good at a low price.

However, when they come to buy, they are encouraged to buy a good that costs more.

So, in this way, the bait and switch tactics is used by sellers to deceive the buyers.

Learn more about the bait and switch tactics here:

brainly.com/question/981097

3 0
2 years ago
Comet Company is owned equally by Pat and his sister Pam, each of whom hold 100 shares in the company. Comet redeems 50 of Pam's
lesantik [10]

Answer:

Total E&P = $ 160000

Total voting Right Sold = 50/ (100+100) = 25%

Reduction of E& P due to exchange = Total E&P*Total voting Right Sold

Reduction of E& P due to exchange = 160000*25%

Reduction of E& P due to exchange = 40000

Reduction of E& P Lower of Total E&P*Total voting Right Sold or Amount realised

Reduction of E& P Lower of 40000 or (50*1000)

Reduction of E& P Lower of 40000 or 50000

Answer

A reduction of $40,000 in E&P because of the exchange.

7 0
3 years ago
your company’s marketing manager implements the company’s new marketing strategy and tactics on the market. what types of inform
stiks02 [169]

The type of information the marketing manager needs to monitor to judge the plan's successful implementation and strategic effectiveness are profits, customer relations, sales information, and competitor reactions.

A marketing strategy is one whose objective is to position the company in relation to competitors, through the creation of value that will help attract and retain consumers.

There are several tools that can help shape an organization's marketing strategy, such as:

  • The 5 P's of marketing.
  • SWOT Analysis.
  • CRM.

Therefore, the manager must monitor profits, company-customer relationships, sales, and competitor reaction to judge the success of a marketing plan, which should generate value and market leadership for an organization.

Learn more here:

brainly.com/question/1577600

8 0
3 years ago
An organizational chart of a company shows vice presidents with responsibility for key areas such as design, manufacturing, sale
Romashka-Z-Leto [24]

Answer: Functional

Explanation: The functional structure of an organisational chart places people with similar skills who perform similar activities in a group under a common manager who answers to an executive a level up in the hierarchy who may oversee multiple departments. Therefore, an organizational chart of a company showing vice presidents with responsibility for key areas such as design, manufacturing, sales, marketing, and after-sales support would reflect a functional structure.

An advantage of the functional structure is that employees are allowed to focus their collective energies on executing their roles as a department but sometimes they might develop tunnel vision (seeing the company solely through the lens of the employee’s job function) and often at times there is a lack of inter-departmental communication.

6 0
3 years ago
Other questions:
  • Marina Manufacturing is considering buying new equipment for its factory. The new equipment will reduce variable labor costs but
    12·1 answer
  • Guillen, Inc. began work on a $7,000,000 contract in 2020 to construct an office building. Guillen uses the completed-contract m
    11·1 answer
  • Alicia (age 27) is a single, full-time college student. she earns $13,200 from a part-time job and has taxable interest income o
    7·2 answers
  • Suppose you have drawn a consumer's budget line for food and clothing, with food on the x-axis. Which of the following events wo
    15·1 answer
  • _________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced
    7·1 answer
  • Which of the following is true?Select one:a. Overhead costs are often affected by many issues and are frequently too complex to
    9·1 answer
  • Which poet, who seems be using iambic pentameter, bends the meter most?
    10·1 answer
  • How to get a refund on Brainly
    7·2 answers
  • Which examples demonstrate common E-marketing work environments? Check all that apply.
    8·2 answers
  • Which scenario below is an example of complementary products, based on their cross-price elasticity?A. Bananas and lettuce, with
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!