1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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%

You might be interested in
If job a and job b are identical in all aspects, except that job b pays higher wages, what will happen over time?
Bumek [7]
Job b will go out of business sooner if their profit is the same as A
6 0
3 years ago
While a business plan is a detailed document with many sections, its overall purpose is to describe the nature of the business,
sveta [45]

Answer:

.

Explanation:

6 0
2 years ago
Trisha makes purses out of old blue jeans and sells them to customers at local craft fairs. what type of marketing channel does
Anettt [7]

Answer:

Direct.

Explanation:

No intermediaries are used to provide goods and services to customers . Typically seller is the manufacturer or an individual.

5 0
3 years ago
What can cause the market demand curve for day-old bread -- an inferior good -- to shift rightward (an increase in demand)
Sedbober [7]

A factor that can cause the market demand curve for day-old bread to shift rightward is a decrease in income.

<h3>What is an inferior good?</h3>

An inferior good is a good whose demand falls when income rises and increases when income falls. An inferior good is a good whose demand increases when income falls.

<h3>What is an increase in demand?</h3>

An increase in demand occurs when the demand for a good increase as a result of factors other than a change in the price of a good. When there is an increase in demand, there would be a shift to the right of the demand curve.

For more information about the increase in demand, please check: brainly.com/question/25871620

5 0
2 years ago
If a company is using the accrual basis accounting method, when should it record its earned revenue?
BigorU [14]

Answer: b

Under the accrual basis of accounting, expenses are matched with the revenues related to it and/or are reported when the expense occurs, and not just when the cash is paid. The company should record its earned revenue when services are rendered. Payment may come at a later date.

4 0
2 years ago
Other questions:
  • What is considered a necessary loan
    7·1 answer
  • A gift shop sells 2000 boxes of scented candles a year. The ordering cost is $100 for scented candles, and holding cost is $10 p
    6·1 answer
  • Debit means increase and credit means decrease for all accounts. true false
    14·1 answer
  • A cost which remains constant per unit at various levels of activity is a:
    15·1 answer
  • Which of the following basic steps in risk analysis should be performed first?
    6·1 answer
  • The tax rate as a percent, r, charged on an item can be determined using the formula – 1 = r, where c is the final cost of the i
    9·2 answers
  • Which of the following factors should be considered when deciding whether to keep a product line or drop it? Check All That Appl
    6·2 answers
  • Due to a recession in the United States and abroad, ski resorts have suffered from a lack of guests during the peak season. Thes
    5·1 answer
  • Binder Corporation agreed to build a warehouse for a client at an agreed contract price of $4,000,000. Expected (and actual) cos
    5·2 answers
  • 2. Which of the following groups of users would primarily be interested in a company's annual
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!