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Alex777 [14]
3 years ago
11

Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt–equity ratio of .75. The cost of equity is 11.6 p

ercent and the pretax cost of debt is 6.7 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 40 percent?
Business
1 answer:
raketka [301]3 years ago
7 0

Answer:

the capital structure weight of the firm's equity will be 57.14 %.

Explanation:

Weighted Average Cost of Capital is the return that is required by the providers of long term sources of finance.

A debt–equity ratio of 0.75 means:

Debt : Equity = 0.75 : 1

The Total Ratio will be = 0.75 + 1.00

                                     = 1.75

Therefore, the  capital structure weight of the firm's equity will be :

Equity Weight = Equity Ratio ÷ Total Ratio

                       = 1.00 ÷ 1.75

                       = 0.5714 or 57.14 %

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3 0
3 years ago
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Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subs
arlik [135]

Answer:

Number of new shares:

= 140,000×(1÷2)

= 70,000

Amount of new investment:

= 70,000×$10

= $700,000

Total value of company after issue:

= $700,000+140,000×$40

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= 210,000

Share price after issue:

= $6,300,000÷210,000

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Explanation:

4 0
4 years ago
Preferred stock comes in many varieties. ___ preferred stock includes a requirement that past dividends not paid must be paid in
Keith_Richards [23]

Answer:

<u>Cumulative</u>

<u>Participating </u>

<u>Convertible </u>

<u>Redeemable</u>

<u>Repurchase </u>

Explanation:

Cumulative preference shares are those preference shares wherein the annual dividend must be paid. In case dividend is not paid for an year, it gets accrued and in such a scenario, no common stock dividend can be paid unless cumulative preference dividend is paid.

Participating preference shares are those preferred stock holders who apart from receiving their own dividends are eligible to participate in dividends payable to common stockholders provided the dividend rate for common stockholders is increased.

Convertible preferred stocks are those which can be converted into common stock as per a specified conversion ratio and under other conditions.

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5 0
3 years ago
[30 PTS + BRAINLIEST]
saw5 [17]

Answer:

C

Explanation:

A farmer would want to look at the economic status of the US because his goal is to sell as much wheat as possible and make the most profit. If he pays no attention to the economy and there's a recession but he still sells his wheat at the normal price, people whose stocks are going down and who are losing money will be unable to, and unwilling to, pay the price. Thus, the farmer must inspect the changing economic statuses of the US to determine the best and most effective way to market out his wheat to the public.

Changes in US racial patterns have no impact on the marketing of the farmer's wheat, so A is incorrect.

The number of births per year is also irrelevant, as is the general population growth numbers because these do not affect the way the farmer will market his crops, so B and D are incorrect.

Hope this helps!

3 0
4 years ago
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A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies
d1i1m1o1n [39]

Answer:

True

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