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german
3 years ago
14

Company X has 2 million shares of common stock outstanding at a book value of $2 per share. The stock trades for $3 per share. I

t also has $2 million in face value of debt that trades at 90% of par. What is the weight of debt for WACC purposes?
A) 13.91%
B) 23.08%
C) 31.03%
D) 27.67%
Business
1 answer:
Vera_Pavlovna [14]3 years ago
8 0

Answer:

Correct option is B.

<u> The weight of debt for WACC purposes is 23.08%</u>

Explanation:

Amount of debt = 2 million x 0.90

 = 1.80 million

Amount of equity = 2 million x 3

= 6 million

Weight of debt = amount of debt/ (amount of debt + amount of equity)

  = 1.80 million / ( 6 million + 1.80 million)

  =23.08%

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Match the different types of incomes to their sources.
Rzqust [24]
There are three (3) types of income: Earned Income, Portfolio Income and Passive Income. 

Earned Income - a type of income that is generated through work (e.g. salary)

Portfolio Income - These income are somewhat called "capital gains" because it is where the state gets salary taxes. This type of income is generated through selling investments in a higher price that you paid. 

Passive Income - This type of income is generated through your assets that you have created. Like for instance, you bought a house and let it rent to earn an income. 



7 0
3 years ago
Read 2 more answers
A manufacturer of prototyping equipment wants to have $3,000,000 available 10 years from now so that a new product line can be i
diamong [38]

Answer:

annual savings = future value / [(1 + r)ⁿ - 1 ] / n

annual savings = $3,000,000 / [(1 + 0.1)¹⁰ - 1 ] / 0.1

annual deposit = $188,236.18

Explanation:

this is an ordinary annuity

future value = $3,000,000

interest rate = 10%

periods = 10

using the future value of an annuity formula, annual deposit = future value / annuity factor

FV annuity factor, 10 periods, 10% = 15.937

annual deposit = $3,000,000 / 15.937 = $188,241.20

instead of using annuity factors, you can solve this equation:

annual deposit = future value / [(1 + r)ⁿ - 1 ] / n

annual deposit = $3,000,000 / [(1 + 0.1)¹⁰ - 1 ] / 0.1

annual deposit = $188,236.18

Both answers are very similar, the difference is only 0.00267%

8 0
3 years ago
The discounted payback period for a project will be _______ the payback period for the project given a positive, non-zero discou
Zepler [3.9K]

Answer: longer than

Explanation:

The discounted payback period simply refers to the number of years that will be required for the cumulative discounted cash inflows to be able to cover a project's initial investment.

It should be noted that the discounted payback period for a project will be longer than the payback period for the project given a positive, non-zero discount rate. This is because the time value of money will be taken into consideration, hence, this will bring about a longer time.

3 0
2 years ago
What does an exchange rate tell you?
MrRa [10]
When you ask me about exchage rate I remember about Arabic coming to Africa for trading goods. So this tells me that the the value of one currence from deferent nations was converted to another. I hope you got it.
8 0
3 years ago
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Shockglass Company had a beginning inventory of $15,000. During the year, the company recorded inventory purchases of $45,000 an
Otrada [13]

Answer:

A. $10,000

Explanation:

We know that :

cost of goods sold = opening inventory + purchases - ending inventory

hence,

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The ending inventory must equal: $10,000

8 0
2 years ago
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