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Crazy boy [7]
3 years ago
5

PAW Industries has 5 million shares of common stock outstanding with a market price of $8.00 per share. The company also has out

standing preferred stock with a market value of $10 million, and 100,000 bonds outstanding, each with face value $1,000 and selling at 96% of par value. The cost of equity is 19%, the cost of preferred is 15%, and the cost of debt is 9%. If PAW's tax rate is 34%, what is the WACC?
a. 10.14%
b. 10.38%
c. 12.51%
d. 14.33%
Business
1 answer:
Leokris [45]3 years ago
6 0

Answer:

a. 10.14%

Explanation:

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

w= weight of...

r = cost of..

Find the market values;

Common equity(E) = 5,000,000* 8 = 40,000,000

Preferred stock(P) = 10,000,000

Debt (D) = 100,000 *1000 *0.96 = 96,000,000

Total value = 146,000,000

Therefore;

wE= 0.2740

wP = 0.0685

wD = 0.6575

Cost of capital;

rE = 19% or 0.19

rP = 15% or 0.15

rD = 9% or 0.09

WACC = (0.2740*0.19) + (0.0685 * 0.15) + [0.6575*0.09(1-0.34)]

WACC = 0.0521 + 0.0103 + 0.0391

WACC = 0.1015 or about 10.14%

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Answer:

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Explanation:

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7 0
3 years ago
Assume the market basket contains 20X, 30Y, and 50Z. The current-year prices for goods X, Y, and Z are $2, $6, and $10, respecti
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Answer:

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Explanation:

Given;

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Z = $10

The base-year prices are

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= ∑ (Quantity × Price)

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= $20 + $90 + $250

= $360

also,

CPI for the current year = \frac{\textup{Cost of market basket at current year prices}}{\textup{Cost of market basket at base year prices}}\times100

or

CPI for the current year = \frac{\$720}{\$360}\times100

or

CPI for the current year = 200

8 0
3 years ago
Zappos trains, educates, and gives its employees the knowledge to make decisions in the workplace. this philosophy is referred t
Elenna [48]
The philosophy discussed above is called enabling.
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poizon [28]

Answer:

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Given that

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So by considering the above information, the amount of gain or loss is zero as she does not recognized in the distribution and her basis in her partnership interest is the remaining amount i.e

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3 0
3 years ago
Mochel Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has e
oee [108]

Answer:

$16,100 favorable

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The same should be considered and relevant

3 0
3 years ago
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