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
lukranit [14]
3 years ago
10

If a company has a capital structure of $5,000,000 common stock with a cost of 17%, $2,000,000 bonds at 4%, $1,000,000 of short

term debt with a cost of 7%, and $2,000,000 preferred stock with a cost of 3%, what is the weighted average cost of Capital?
Business
1 answer:
rjkz [21]3 years ago
3 0

Answer:

Explanation:

Weighted Average Cost of Capital; formula is as follows;

WACC = wE*re + wP*wp + wD*rd(1-tax)

where w= weight of...

r = cost of ...

E= common equity

P = preferred stock

D = Debt

Find the weights of each source of capital;

WACC = (0.50*0.17) +(0.20*0.03) + [0.20*0.04(1-0.40)] +[0.10*0.07(1-0.40)]

WACC = 0.085 +0.006 + 0.0048 + 0.0042

WACC = 0.1 or 10%

You might be interested in
Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the governme
Gnom [1K]

Answer:

Expansionary fiscal policy; lead to a budget deficit

Explanation:

A balanced budget is when the income of the government equals government's spending

A recession is when the GDP of a country for two consecutive quarters is negative. It is a period of slowdown in economic activities.

If there is a recession, the government would want to increase money supply by conducting an expansionary fiscal policy but would be prevented from doing so because of the balanced budget rule as an expansionary fiscal policy would lead to a budget deficit.

A budget deficit is when government spending exceeds income

3 0
3 years ago
What is an advertising allowance
Aliun [14]

Answer:

An advertising allowance is money that a product manufacturer or service provider pays to a retailer to get the word out about their product. ... By helping the retailer pay its advertising costs, the company's advertising allowance gives the retailer an incentive to carry that product.

5 0
3 years ago
Different societies use different types of money. The MAIN requirement for any type of money to become a medium of exchange is t
Snezhnost [94]
The answer is D) easy to divide into units
8 0
3 years ago
Olivia is willing to pay $185 a month for four years for a car payment. if the interest rate is 4.9 percent, compounded monthly,
Grace [21]
Let x = the price of the car that Olivia can afford.

Down payment = $2,500
Remaining amount to be financed is P = x - 2500.

Total payments should equal the monthly payments.
The total payment over 4 years (48 months) is
A  = $185*48 = $8,880

The rate is r = 4.9% = 0.049.
The compounding interval is n = 12.
The time is t = 4  years.
The amount financed is P = $(x - 2500).
Therefore
(x - 2500)(1 + 0.049/12)⁴⁸ = 8880
1.216(x - 2500) = 8880
x - 2500 = 7302.63
x = 9802.63
Olivia can afford a car priced at $9,802.63.

Answer: $9,802.63

4 0
3 years ago
In a Chapter 11 bankruptcy, a class of creditors is considered to have accepted the bankruptcy plan when: Group of answer choice
anygoal [31]

Answer:

In a Chapter 11 bankruptcy, a class of creditors is considered to have accepted the bankruptcy plan when:

one-half of the class in number and two-thirds of the class in dollar amount agree.

Explanation:

In a Chapter 7 bankruptcy, the business assets are liquidated to pay the creditors.  In a Chapter 11 bankruptcy, the business assets are not liquidated.  Instead, the business is refinanced as the assets and debts are reorganized, making it possible for the continued existence of the business.  This is the reason the agreement of the creditors are usually paramount in the decision to undergo a Chapter 11 bankruptcy, unlike a Chapter 7 bankruptcy.

7 0
3 years ago
Other questions:
  • Suppose a business can sell x gadgets for p(x)=250 - 0.01x dollars a piece, and it costs the business c(x) = 1,000 + 25x dollars
    15·2 answers
  • Gross Investment $18
    9·1 answer
  • Choose a well-known company that you are familiar with, and explain how that company could use each of the five P's of the marke
    10·2 answers
  • The development of kidney failure becomes more prevalent with age; therefore, the amount of _______ in the diet must be reduced.
    9·1 answer
  • Four Seasons Hotels sell private residences in several of their properties and send direct mail to prospective residents asking
    10·1 answer
  • Becka borrowed $420 from her cousin at the rate of 8% per year. If the inflation rate was 2.5% that year, what is her cousin's a
    15·1 answer
  • Sb-33 what does a regulatory buoy with a diamond symbol indicate
    9·2 answers
  • According to this excerpt, what is one major way in which the world bank differs from a regular bank?
    10·2 answers
  • In the Solow growth model with population growth, but no technological progress, the steady-state amount of investment can be th
    6·1 answer
  • Mitchell Co. has $1.1 million of debt, $3 million of preferred stock, and $3.3 million of common equity. What would be its weigh
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!