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butalik [34]
3 years ago
11

1. Sorensen Systems Inc. is expected to pay a $2.00 dividend at year end (D1 = $2.00), the dividend is expected to grow at a con

stant rate of 5.0% a year, and the common stock currently sells for $50.00 a share. The before-tax cost of debt is 7.00%, and the tax rate is 45%. The target capital structure consists of 40% debt and 60% common equity. What is the company’s WACC if all the equity used is from retained earnings? (Answer: %)
Business
1 answer:
Alinara [238K]3 years ago
4 0

Answer:

6.94%

Explanation:

The computation of the company WACC is shown below:

= Weightage of debt × cost of debt × (1 - tax rate)  + (Weightage of  common stock) × (cost of common stock)

where,

Cost of common stock is

= Dividend ÷ Stock price + Growth rate

= $2 ÷ 50 + 5.0%

= 4% + 5%

= 9%

So, the company WACC is                                                                              

= (0.40 × 7%) × ( 1 - 45%) +  (0.60 × 9%)

= 1.54% + 5.4%

 = 6.94%

Hence, the company WACC is 6.94%

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Answer:

I would like to request the application fee waiver of $65 if it poses a financial hardship for me.

Explanation:

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3 years ago
Which term below best describes a situation in which an hr manager conducts cost-benefit analyses to examine the impact of contr
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Able Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay
faltersainse [42]

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Explanation:

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3 years ago
The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.9 hours
topjm [15]

Answer:

-$30,250 favorable

Explanation:

labor efficiency variance = (standard quantity - actual quantity) x standard labor cost

  • actual quantity = 7,700 hours
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3 years ago
Risk acceptance defines the quantity and nature of risk that organizations are willing to accept as they evaluate the trade-offs
NNADVOKAT [17]

Answer:

Tolerance

Explanation:

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