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Andrej [43]
3 years ago
6

Healthy Snacks has a target capital structure of 60 percent common stock, 3 percent preferred stock, and 37 percent debt. Its co

st of equity is 16.8 percent, the cost of preferred stock is 11.4 percent, and the pretax cost of debt is 8.3 percent. What is the company's WACC if the applicable tax rate is 34 percent?a. 13.29 percentb. 12.61 percentc. 12.34 percentd. 12.45 percente. 12.83 percent

Business
1 answer:
mars1129 [50]3 years ago
5 0

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

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Calculate the opportunity cost of capital (WACC) for a firm with the following capital structure: 53% in debt, 15% in preferred
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Answer:

The WACC is 8.75%

Explanation:

The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure is made up of debt, preferred stock and common stock.

The formula for WACC is,

WACC = wD * rD * (1 - tax rate)  +  wP * rP  +  wE * rE

Where,

  • w represents the weight of each component in the capital structure or value of each component as a proportion of total assets
  • r represents the cost of each component
  • we take after tax cost of debt. So we multiply cost of debt by (1 - tax rate)

The weight of common equity = 1 - (0.53 + 0.15)   =  0.32 or 32%

The WACC is:

WACC = 0.53 * 0.0712 * (1 - 0.29)  +  0.15 * 0.109  +  0.32 * 0.1387

WACC = 0.0875 or 8.75%

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3 years ago
Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for s
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Answer:

Please see attached solution

Explanation:

a. Cost of goods sold . Detailed explanation attached.

b. Ending inventory. Detailed explanation attached.

Note 1.

Weighted average cost per unit on January 20

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= $77.5

Note 2

Weighted average cost per unit on January 30

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= $79.00

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3 years ago
visit any successful local business and interview the owner on the initiatives taken by his or her business in poverty, HIV and
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If a credit balance in Unearned Revenue (a liability account) is incorrectly listed as a credit balance to the Sales Revenue acc
gtnhenbr [62]

Answer:

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Explanation:

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So if the unearned revenue is incorrectly listed as a sales revenue so still the trial balance is in the balance as both accounts have a credit balance

Therefore, the given statement is true

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4 years ago
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A warranty is a seller's or lessor's express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.

A warranty is the written assurance of a product's or service's quality as given to a consumer by the manufacturer or service provider. Insofar as the warranty's provisions stipulate, warranties offer clients legally-guaranteed service replacement or issue correction for the period of the warranty.

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