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olchik [2.2K]
3 years ago
7

Fama’s Llamas has a weighted average cost of capital of 9.2 percent. The company’s cost of equity is 12.8 percent, and its cost

of debt is 7.4 percent. The tax rate is 22 percent. What is the company’s debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Business
1 answer:
Dmitriy789 [7]3 years ago
5 0

Answer:

D_w = 51.2236%

E_w =  48.7764%

Explanation:

From the WACC formula we can solve for the weight

as Ew + Liabilities weight = 1

we can express Ew as (1-Liabilities weight)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.128

Kd 0.074

t 0.22

after tax debt:  0,05772

WACC 0.092

0.092 = 0.128(1-D_w) + 0,05772(D_w)

0.092 = 0.128-0.128(D_w) + 0,05772(D_w)

0.128 - 0.092= (0.128-0.05772)(D_w)

0.036 = 0,07028(D_w)

D_w = 0,512236

E_w = 1 - 0.51236 =0.487764

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For computing the ending balance of capital account, first, we have to compute the net income or loss which is shown below:

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The anoucement of a share repurchase is not a commitment to continue repurchases, so the information content of a repruchase annoucement is less stronger, so the stock value may not increase as much.

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2 years ago
When other factors such as health and illiteracy rates are added to global comparisons of GDP and population, which of the follo
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<h2>Further Explanation:</h2>

The economic is a human activity that has a purpose in improving the social standard of living based on the choice of scarcity.

Take an example of the goods for production.

In the fundamental theory of economy, which accommodated in Adam Smith in the latest 18th century.

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<h2>Learn more</h2>
  • Account with highest interest : brainly.com/question/2989392
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<h2>Details of the question</h2>

Grade: University level

Subject: Economy

Chapter: Microeconomy

4 0
3 years ago
Read 2 more answers
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