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
alexandr402 [8]
3 years ago
7

A company has determined that its optimal capital structure consists of 43 percent debt and the rest is equity. Given the follow

ing information, calculate the firm's weighted average cost of capital.kd = 7.0 %Tax rate = 35 %P0 = $ 28.86 Growth = 4.9 %D1 = $ 0.94 Show your answer to the nearest .1%
Business
1 answer:
ale4655 [162]3 years ago
6 0

Answer:

31.5%

Explanation:

Given from the question kd = 7.0 %

Tax rate = 35 %

P0 = $ 28.86

Growth g = 4.9 %

D1 = $ 0.94

First find the cost of common stock by

rS = D1/P0 + g

=0.94/$28.86 + 0.49

=0.523

= 52.3%

Finally, calculate the weighted average cost of capital WACC,

using rs= 0.523,

Tax rate =43% =0.43

Equity E 100% - 43% = 57% =0.57 and

kd=7.0 % = 0.07

so WACC = (D/A)(1 -­ Tax rate)kd+(E/A)rs

= 0.43(1 ­- 0.43)(0.07) + 0.57(0.523)

0.0172 + 0.298

= 0.315

= 31.5%

You might be interested in
Scot and Vidia, married taxpayers, earn $92,000 in taxable income and $5,000 in interest from an investment in City of Tampa bon
jok3333 [9.3K]

Answer:

a. Total Income=$152,500

Marginal Tax rate = 17.3%

Explanation:

Total Income=Taxable Income+Additional Income = $92,000+$60,500=$152,500

Marginal Tax rate = 17.3%

3 0
3 years ago
Consider the following financial statement information for the Sourstone Corporation:
DENIUS [597]

Answer:

A. 56.32 days

B. 40.38 days

Explanation:

The Operating cycle is the Inventory period + AR period

Inventory period= 365/(Cost of goods sold/Average inventory)

Average inventory= (Beginning Inventory + Ending Inventory)/2

Accounts Receivable period= 365/(Credit Sales/Average Accounts Receivable )

Average Accounts Receivable= (Beginning Accounts Receivable + Ending Inventory Accounts Receivable)/2

Calculated Inventory period= 42.58 days

Calculated Accounts Receivable period= 13.74 days

The Cash cycle is also called the Net Operating cycle which is the Inventory period + Accounts Receivable period- Accounts Payable period

Accounts Payable period= 365/(Cost of goods sold/Average Accounts Payable)

Average Accounts Payable = (Beginning Accounts Payables + Ending Inventory Accounts Payable)/2

Calculated Accounts Payable period= 15.94 days

5 0
2 years ago
When an organization ties formal succession plans to career paths for employees, it __________. Group of answer choices improves
stealth61 [152]

Answer:

It improves employee retention and performance motivation.

Explanation:

There are few factors that keep employee motivated and loyal toward organization. The basic factors are career path and monetary benefits that keep the energy flow in the employee.

A formal succession plan is a human resource management strategy for identifying the potential successor, it reduces the confusion for the organization and employee in the method of hiring and promotion. These strategies also keep an employee motivated, improve performance and retention in the organization as they find growth and security in the organization.

3 0
3 years ago
Wildside Inc., a company that organizes wildlife tours, gives equal importance to customers and employees. The managers at Wilds
umka2103 [35]

Answer: Internal marketing

Explanation: Internal marketing is the process of facilitating a company's purposes or goals, commodities, and services to workers inside the company. It partakes to developed confidence and devotion among the workers also formulating an elevated amount of participation in the ultimate achievement of the company and encourages the development of the company's trademark public support or recommendation.

8 0
3 years ago
Read 2 more answers
In periods of rising prices when lifo is used, companies avoid reporting a ________ because a portion of the gross profit must b
Marysya12 [62]
By the use of Lifo in a period where the prices rise, companies avoid to report paper profit, also called phantom profit, as economic gain. Have in mind that in periods of changing prices, the cost flow assumption can have a significant impact onincome and on evaluations based on income. That is why when Lifo is used the companies tend to <span>report the lowest net income </span>
8 0
3 years ago
Other questions:
  • The generic value chain consists of​ ________ activities and four support activities.
    8·1 answer
  • Purchase investment in bonds for $115,000. Sell land costing $40,000 for only $31,000, resulting in a $9,000 loss on sale of lan
    11·1 answer
  • you own $750000 worth of stock, and you are worried the price may fall by year-end in 6 months. you are considering
    11·1 answer
  • Which explains a way the U.S. government has created incentives for people to save?
    10·1 answer
  • _______ decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.
    15·1 answer
  • A person driving a car has the duty to exercise what standard of care?
    13·1 answer
  • Hillary enters into a shipment contract with a dress manufacturer for fifty red dresses. The dress manufacturer sends fifty blue
    11·1 answer
  • Ivanhoe Corporation has fixed costs of $412,800. It has a unit selling price of $4, unit variable cost of $2.40, and a target ne
    8·1 answer
  • Select the BEST answer choice.
    6·1 answer
  • Explain how we derive the supply curve for an individual firm
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!