All categories

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

What are the advantages of taking a criminal case to the criminal grand jury?

sattari [20]

The main advantage of a grand jury is that it provides a system for conducting a legally-binding "dry run" before a formal and protracted criminal trial takes place.

4 0

3 years ago

Tony's Deli has cash of $145, accounts receivable of $99, accounts payable of $219, and inventory of $413. What is the value of

grigory [225]

Answer:

the value of the quick ratio is 1.11 times

Explanation:

The computation of the value of the quick ratio is shown below:

Quick Ratio = Total Quick Assets ÷ Total current liabilities

= [Cash + Accounts Receivables] ÷ Accounts Payable

= [$145 + $99] ÷ $219

= $244 ÷ $219

= 1.11 Times

Hence, the value of the quick ratio is 1.11 times

4 0

3 years ago

____________ occurs when a seller takes on various digital identities by opening up several email accounts and bids on his or he

Aleksandr-060686 [28]

Answer:

Shill bidding

Explanation:

Shill bidding occurs when a seller takes on various digital identities by opening up several email accounts and bids on his or her own items multiple times to prompt genuine bidders to provide a much higher bid for an item than they would have done otherwise

5 0

2 years ago

Phil, age 20, is single and can be claimed as a dependent on his parent's return. He had $150 in interest income and wages of $7

Korvikt [17]

Answer: B - $7,150

Explanation: Standard taxation is an option by IRS to reduce an inidvidual taxable income. this is subject to an individuals filling status.

Phil who is aged 20, single and who can claim a dependent on his parents tax filling return. As of 2019, his standard tax deduction is limited to his earned income plus $350.

According to the above question, Phil earns $7,000 as wages plus $150 in interest income.

From the above information, Phil has a standard tax of $7,150.

3 0

3 years ago

Mr. Ballard retired in 2018 at age 69 and made his first withdrawal of $35,000 from his traditional IRA. At year-end, the IRA ba

serg [7]

Answer:

Contributions amounting to $320,000 were non deductible.

First year of withdrawal:

Taxfree withdrawal % = Uncovered Investments / Current year value x 100

Taxfree withdrawal % = [$320,000 / ($441,000 + $35,000)] x 100

Taxfree withdrawal % = [$320 / $476,000] x 100

Taxfree withdrawal % = 67.23%

Amount of taxfree withdrawal = 67.23% x $35,000

Amount of taxfree withdrawal = $23,530.5

Taxable amount = Total Withdrawal - Tax free withdrawal

Taxable amount = $35,000 - $23,530.5

Taxable amount = $11,469.5

Second year of withdrawal:

Taxfree withdrawal % = [($320,000 - $23,530.5) / ($407,000 + $60,000)] x 100

Taxfree withdrawal % = [$296, 469.5 / $467,000] x 100

Taxfree withdrawal % = 63.48%

Amount of taxfree withdrawal = 63.48% x $60,000

Amount of taxfree withdrawal = $38,088

Taxable amount = $60,000 - $38,088

Taxable amount = $21,912

$35,000 would be included in taxable income in first year and $60,000 would be included in taxable income in second year.

8 0

3 years ago