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Amanda [17]
3 years ago
12

Anderson's Furniture Outlet has an unlevered cost of capital of 8%, a tax rate of 35%, and expected earnings before interest and

taxes of $1,500. The company has $3,500 in bonds outstanding that have a 5% coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?
Business
1 answer:
navik [9.2K]3 years ago
5 0

Answer:

8.67%

Explanation:

The computation of cost of equity is shown below:-

Before capitalization the value of equity = Interest and taxes × (1 - tax rate) ÷ Cost of capital

= $1,500 × (1 - 0.35) ÷ 0.08

= $1,500 × 0.65 ÷ 0.08

= $12,188

Value of firm with debt = The value of equity before capitalization + (Bonds outstanding × tax rate)

= $12,188 + ($3,500 × 0.35)

= $13,413

After recapitalization debt equity ratio = Cost of capital + ((Cost of capital - Coupon percentage) × Tax rate × (1 - tax rate)

= 0.08 + ((0.08 - 0.05) × (0.35) × (0.65))

= 0.08 + ((0.03) × (0.35) × (0.65))

= 8.67%

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sashaice [31]

Answer:

HUD sales contract

Explanation:

An HUD sales contract is a form that is filled by a broker concerning the sale of a property or properties. Filling an HUD sales contract is a very important knowledge that a sales agent must possess as it could either impress or discourage a buyer from purchasing a property. An HUD sales contract is also called HUD-9548.

I hope this helps.

7 0
2 years ago
Dave facilitated a hiring committee for his advertising company. Six employees (including two managers) met together to discuss
Roman55 [17]

Answer: Autocratic

           

Explanation: In simple words, Autocratic leadership style refers to a management style under which all the decisions are made by a single person with the ultimate authority. Although, the input from others could be taken into consideration.

In the given case, Dave made a hiring committee to employ new individuals. However the final decision for hiring was to be made by the head of public relations.

Hence we can conclude that the given case illustrates autocratic leadership style.

4 0
3 years ago
1) The defect rate for your product has historically been about 2.00%. For a sample size of 300, the upper and lower 3-sigma con
Sphinxa [80]

Answer:

UCL= <u>0.044</u>

LCL=<u>-0.004</u>

Explanation:

Use following formula to calculate the UCL and LCL

UCL = p + z\sqrt{\frac{p(1-p)}{n}}

Where

P = defect rate = 2% = 0.02

z = sigma control chart limit = 3

n = samploe size = 300

PLacing values in the formula

UCL = 0.02+3\sqrt{\frac{0.02(1-0.02)}{300}}

UCL = 0.02 + 3 x 0.008082904

UCL = 0.02 + 0.024248711

UCL = 0.044248711

UCL = 0.044

Now calculate LCL using folllowing formula

LCL = p - z\sqrt{\frac{p(1-p)}{n}}

Where

P = defect rate = 2% = 0.02

z = sigma control chart limit = 3

n = samploe size = 300

PLacing values in the formula

LCL = 0.02 - 3\sqrt{\frac{0.02(1-0.02)}{300}}

LCL = 0.02 - 3 x 0.008082904

LCL = 0.02 - 0.024248711

LCL = -0.004248711

LCL = -0.004

4 0
2 years ago
Executive Chalk is financed solely by common stock and has 25 million shares outstanding with a market price of $10 a share. It
luda_lava [24]

Answer: See explanation

Explanation:

First we will have to calculate the value of the firm before the debt issue. This will be:

= 25,000,000 × $10

= $250,000,000

We also calculate the value of the firm after after the proposed capital structure change. The value of equity will be:

= $250,000,000 - $160,000,000

= $90,000,000

Therefore, the value of debt will also be $160,000,000.

6 0
2 years ago
What is the SWOT(strength,weakness,opportunity, threats) for empty malls in malaysia?​
Levart [38]
......................
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