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3 years ago

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

Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVs) will increase, decrease or remain the

olga nikolaevna [1]

a. When other car manufacturers begin to make SUVs, the price elasticity of demand for Ford's SUV will increase. This is because the options consumers have has also increased.

b. When import is banned, the price elasticity of demand for Ford's SUVs will decrease. This is because there are less substitutes for Ford's SUVs. Consumers would now have limited choices.

c. As a result of the ad campaigns, the price elasticity of demand for Ford's SUVs will decrease. This is because other cars would be considered to be les safe when compared with the Ford SUVs.

d. Overtime, the price elasticity for Ford Cars will increase as there would be more substitutes

Price elasticity of demand measures how quantity demanded responds to changes in the price of a good

<em>Types of price elasticity </em>

Elastic demand : this means that quantity demanded is sensitive to changes in price. Coefficient of elasticity is greater than 1
Inelastic demand : this means that quantity demanded does not respond much to change in price. Coefficient of elasticity is less than 1

To learn more about demand elasticity, please check: brainly.com/question/13565779?referrer=searchResults

8 0

2 years ago

The following schedule shows the technology of production at Mahalo Macadamia Nut Farm for 2015: Workers Total Pounds of Macada

faltersainse [42]

Answer:

MRPL= $200 = wage rate when there are 5 workers

and MRPL = $1,200 = wage rate when there are 2 workers.

Explanation:

The computation of unionized is shown below:-

Marginal revenue product of labor = Marginal product × Price per unit

Workers Total Production Marginal Product MRPL

(per day)

a b b × $8

0 0

1 200 200 $1,600

2 350 150 $1,200

(350 - 200)

3 450 100 $800

(450 - 350)

4 500 50 $40

(500 - 450)

5 525 25 $200

(525 - 500)

6 510 -15 -$120

(510 - 525)

From the above table MRPL = $200 = wage rate when there are 5 workers

and MRPL = $1,200 = wage rate when there are 2 workers.

4 0

3 years ago

Nikhil is a design manager for a production company. He independently assigns teams, chooses projects, researches trends, and is

Papessa [141]

Answer: Based on this description, it's safe to say that Nikhil's job is high in c. autonomy.

Explanation:

What is meant by an autonomy character?

This is a person who is able to decide or make decisions without being forced to do so they are independent individuals who can take control of their own tasks at a very high standard level. They are professionally capable of using their freedom to make exceptional decisions that are well thought of and of high standard.

Nikhil works independently , is able to distribute the work to the team and is able to provide proper standard report every month without being told or forced to do so this qualifies under autonomy.

6 0

3 years ago

The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on January 1, the beginning of the

Serhud [2]

Answer:

a. $213,000

Explanation:

8 0

3 years ago

Given the following production function for Tight Jeans Corporation, calculate the marginal physical product and the value of th

kicyunya [14]

Answer:

labor input pairs of jeans marginal physical value of marginal

per day product physical product

0 0 0 0

1 10 10 $300

2 36 26 $780

3 56 20 $600

4 68 12 $360

5 74 6 $180

6 76 2 $60

7 76 0 0

8 74 -2 -$60

The marginal revenue product is the value of marginal physical product, and you calculate it by multiplying marginal physical product times the unit price of the pair of jeans.

5 0

3 years ago