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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%

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Answer:

The Cartoon depicts the Head of Government of the USA with hands tied being pulled from 4 different ends of the world

2 Nations stand out, England & Japan who were part of the 4 permanent Member States, (Italy and France make up the balance); whilst European Nations and Foreign Governments are depicted to also pulling at the President.

The Cartoonist opposes U.S Participation in the League of Nations

Explanation:

This is a Post World War 1 Cartoon

As part of the Versailles Treaty from the Paris conference of 1919 a League of Nations was to be formed comprising of the World Powers at the time. Members were expected to respect the sovereignty of other countries and completely discourage the deployment of Military campaigns against other countries

The President of the USA at the time President Woodrow Wilson believed so much in the Vision of the League of Nations but was constrained from having America join because of the overwhelming stand against America's involvement by the isolationist movement in the congress.

The Isolationist movement was specifically against the item X of the League's covenant which required Member nations to support other Nations in the face of an aggression from another. The interpretation of this was that the USA would be completely surrendering its sovereignty and would remain a tool for International Conflicts resolution by deploying men and war equipment as was the case with World War I.

The President is seen in the cartoon firmly rooted to USA ideals albeit opposed to his Vision of joining the League of Nations.

7 0
3 years ago
True or False : When you are thinking of something you want to predict, measure, or change in your business, you are probably th
Ad libitum [116K]

Answer:

True

Explanation:

Dependent variables are variables which are altered by the changes to the independent factors or variables.

The following are instances of dependent and independent variables:

       

Dependent Variable (DV): Profit, Product Quality, Staff Attrition during a recession.

Profit (DV) depends on sales, expenses, the economy, the proficiency of the sales staff, the quality of the product.

The Quality of the Product (DV) depends on the production process, product design, quality of raw materials etc

So, many of the factors highlighted above, which affect the dependent variables are called Independent variable.

Profit, for instance, can be forecasted or changed IF changes are made to sales.

It is possible to measure the quality of a product or service. It can also be altered by increasing or decreasing the quality of raw material input.

Cheers!

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3 years ago
On July 1, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending
Neko [114]

Answer:

a.

July 1, Year 1

Prepaid Insurance                  $15000 Dr

     Cash                                       $15000 Cr

Dec 31, Year 1

Insurance expense                    $2500 Dr

    Prepaid Insurance                     $2500 Cr

b.

July 1, Year 1

Cash                                                  $15000 Dr

    Unearned Service revenue             $15000 Cr

Dec 31, Year 1

Unearned service revenue        $2500 Dr

    Service revenue                           $2500 Cr

Explanation:

a.

The company will record the cash going out of the business for prepaid insurance as credit and the asset account prepaid insurance as debit to record the prepayment of insurance for 3 years at the amount of $15000.

The insurance paid out is for 3 years. So, the per year insurance expense is,

Insurance expense per year = $15000 / 3 = $5000

The adjusting entry made on 31 december will record the insurance months consumed (6 months) as an expense and debit the insurance expense and credit the prepaid insurance asset account.

The insurance expense for 6 months = 5000 * 6/12 = $2500

b.

For the receiving company, the cash is being received and as the service will be provided later on, the cash received will be debited and the unearned service revenue will be credited.

As six months worth of cover has passed, on 31 December, the company will record service revenue for 6 months that is $2500 and debit the liability recorded under unearned service revenue.

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_________ are variables that managers must understand since they can significantly affect the overall competitive position of a
Sphinxa [80]

Answer:

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Answer:

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Explanation:

Standard Chartered is one of the finest bank in the world. The banking sector has been always striving to serve people better and standard chartered has made this possible. The financial statements of the bank are available online. One can easily go to the banks website of their respective country and click the about us tab. Then in the about us tab there is detail about company operations and their mission vision statements along with free and complete access to financial statements.

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3 years ago
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