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Sphinxa [80]
3 years ago
7

Debt: 5,000 7.2 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 108 percent of par; the bo

nds make semiannual payments. Common stock: 440,000 shares outstanding, selling for $62 per share; the beta is 1.05. Market: 11 percent market risk premium and 5.2 percent risk-free rate. What is the company's WACC?
Business
1 answer:
Tatiana [17]3 years ago
7 0

Answer:

the company's WACC is 15.07 %.

Explanation:

WACC = ke × (E/V) + kd × (D/V)

kd = cost of debt

Pv = $1,000 × 108% = - $1,080

n = 30 × 2 = 60

pmt = ($1,000 × 7.2 %) ÷ 2 = $36

p/yr = 2

Fv = $1,000

r = ?

Using a Financial Calculator, the Pre-tax cost of debt, r is 6.5852 or 6.59 %

After tax cost of debt = Interest × (1 - tax rate)

<em>I will use the pre-tax  cost of debt for now since i do not have the tax rate on this question.</em>

ke = cost of equity

    = Return on Risk free security + Beta × Market Risk Premium

    = 5.20 % + 1.05 × 11.00 %

    = 16.75 %

E/V = Market Weight of Equity

      = (440,000 × $62) / (440,000 × $62 + 5,000 × $1,080) × 100

      = 83.48 %

D/V = Market Weight of Debt

      = (5,000 × $1,080) / (440,000 × $62 + 5,000 × $1,080) × 100

      = 16.52 %

WACC = 16.75 % × 83.48 % + 6.59 % × 16.52 %

           = 15.07 %

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The logical conclusion to draw from Nokia's experience in this regard is Nokia prioritized that attribute more highly than the market did. The correct option is d.

<h3>What is the logical conclusion?</h3>

A logical conclusion is a logical statement that is given by taking facts and ideas that are presented before the person. These conclusions are based on true facts and logical things that can happen.

Here, the company Nokia dismissed the original iPhone with its large glass surface, partly because it failed the testing.

Thus, the correct option is d. Nokia prioritized that attribute more highly than the market did.

To learn more about logical conclusion, refer to the link:

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The question is incomplete. Your most probably complete question is given below:

a. Five feet is too stringent; two or three feet would have been more reasonable.

b. The iPhone should have been stronger.

c. Consumers should have paid more attention to Nokia's high standards.

d. Nokia prioritized that attribute more highly than the market did.

e. Apple should have enforced stronger quality controls.

5 0
1 year ago
Some one can answer pls?
olga_2 [115]
The prospect of greater market share and setting themselves apart from the competition is an incentive for firms to innovate and make better products. But no firm possesses a dominant market share in perfect competition. Profit margins are also fixed by demand and supply.

A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods. If a perfectly competitive firm attempts to charge even a tiny amount more than the market price, it will be unable to make any sales.
Perfect competition occurs when there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers.
The market structure is the conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold.

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What's the future value of an investment of $1 a year for each of 4 years, at the end of the last year? Suppose the interest rat
Wewaii [24]

Answer:

4.51

Explanation:

We have to calculate fva. The future value of annuity

Here is the formula

Fva = A [( + I)^n-1/I]

Where a = annuity

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Inserting into formula

1[(1+0.08)^4 - 1/0.08]

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Therefore the future investment is $4.51

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A dependent variable is the thing that you measure in the analysis and what is influenced amid the investigation. The dependent variable reacts to the independent variable. It is called dependent since it "depends" on the independent variable. In a logical trial, you can't have a dependent variable without an independent variable.

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