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myrzilka [38]
3 years ago
7

You are given the following information concerning Parrothead Enterprises:

Business
1 answer:
Alenkinab [10]3 years ago
3 0

Answer:

7.85%

Explanation:

Face value of bond =$2000

Price of current bond= face value× 106.5% = $2130

Term= 25 years×2= 50 period

Coupon rate= 7%×1/2= 3.5%

Coupon amount= coupon rate×face value = $2000×3.5/100

         =$70 for a period

YTM of bond= [coupon amount+ (maturity value-current price)/Term]/0.6×current price+0.4×maturity value]

YTM of bond= 6.487% per annum

Total market value of bond= 8,400bonds× $2130= $17,892,000

Market value of common stock= 275,000shares × 62.50= $18012500

Weight of common stock= 0.490009385

Weight of preferred stock= 0.023259294

WACC= Wd* Kd + Wc*Kc + Wp*Kp

= 0.486731321× 4.86525% +

0.490009385× 10.9624275+

0.023259294× 4.7368421%

=7.849%

= 7.85%(rounded)

Thus, WACC is 7.85%

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The capital projects fund of Hood River completed construction of an addition to its city hall at a cost of $4,000,000. The city
Vanyuwa [196]

The capital projects fund account for the 10 percent retainage as (B) II only.

<h3>What is retainage?</h3>
  • Retainage is a percentage of the agreed-upon contract price withheld until the work is substantially completed to ensure that the contractor or subcontractor will fulfill its responsibilities and complete a construction project.
  • Retention is money kept back by one party in a contract as security for unfinished or defective work.
  • Assume the contract is worth $20,000 and you're submitting a paid app after finishing 25% of the work.
  • So you earned $5,000 during the pay period, but retainage is 5%. The current progress payment has been reduced by $250.
  • As a result, the "Amount Due for this Request" will be $4,750.

So, in the given situation the capital projects fund account for the 10 percent retainage as (II) the credit for $400,000 to Contracts Payable-Retained Percentage, that is (B) II only.

Therefore, the capital projects fund account for the 10 percent retainage as (B) II only.

Know more about retainage here:

brainly.com/question/24101126

#SPJ4

The correct question is given below:
The capital projects fund of Hood River completed the construction of an addition to its city hall at a cost of $4,000,000. The city council approved payment of the amount due to the general contractor, less a 10 percent retainage. How should the capital projects fund account for the 10 percent retainage?

I. As a credit of $400,000 to Deferred Revenue-Retained Percentage

II. As the credit for $400,000 to Contracts Payable-Retained Percentage.

A. I only

B. II only

C. Either I or II

D. Neither I nor II

3 0
1 year ago
The IMF projects that​ China's real GDP per person will be​ 57,163 yuan in 2017 and​ 60,334 yuan in 2018 and that​ India's real
erica [24]

Answer: India / 11.1years

Explanation:

Per capita income (PCI) or average income measures or calculate the average income earned per person in a given place (country,city, region etc.) in a particular year. It can be calculated by dividing the area's total income or wealth by its total number of population.

India's GDP will increase or double than that of China's, because is has a larger income than that of China.

5 0
3 years ago
A growing perpetuity is currently valued $6,225.81. The next annuity payment will be $386 and the discount rate is 9 percent. Wh
viva [34]

Answer:

2.8%

Explanation:

The formula to calculate value of a perpetuity is as follow:

V = Annuity payment in year 1 / (r-g)

V: Value of the perpetuity

r: Discount rate

g: Growth rate (missing value)

By inputting numbers into the formula, we have:

6225.81 = 386 / (0.09 - g)

--> g = 2.8%

3 0
3 years ago
Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life
qwelly [4]

Answer:

Book value= $51,875

Explanation:

Giving the following information:

Purchase price= $80,000

Salvage value= $5,000

Useful life= 8 years

<u>First, we need to calculate the annual depreciation under the straight-line method:</u>

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (80,000 - 5,000) / 8

Annual depreciation= $9,375

<u>Now, we can determine the book value at the end of 2019:</u>

Book value= purchase price - accumulated depreciation

Book value= 80,000 - (9,375*3)

Book value= $51,875

8 0
3 years ago
The higher the firm's flotation cost for new common equity, the more likely the firm is to use preferred stock, which has no flo
kirill115 [55]

Answer:

B. False

Explanation:

Flotation costs are cost that are concerned with issuing new common stock. It is the amount of money or cost incurred by an organization when offering its securities to the public. The cost may include legal fees, auditing fees and registration fees. When the flotation cost goes higher, firms are more likely to use debts rather than preferred stock. This is simply because debt is lesser than both common stock and preferred stock. Also, its fallacy to think that preferred stock doesnt have flotation cost. Its only that its not as high as the ones for new common equity.

8 0
3 years ago
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