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Arada [10]
3 years ago
13

MicroTech Corporation maintains a capital structure of 40 percent debt and 60 percent common equity. To finance its capital budg

et for next year, the firm will sell 11% coupon bonds at par value (assume no flotation costs). The firm will finance the rest of its capital expenditures with retained earnings. MicroTech expects next year's dividend to be $1.30 per share. Dividends are expected to grow at 7% per year for the foreseeable future. The current market value of MicroTech's common stock is $30 per share. If the firm has a corporate tax rate of 21%, what is its weighted cost of capital for next year?
Business
1 answer:
timama [110]3 years ago
5 0

Answer:

weighted cost of capital for next year is 10.27 %.

Explanation:

Weighted cost of capital = Ke × (E/V) + Kd × (D/V)

Ke = Cost of Equity

    = Dividend Yield + Expected growth rate

    = $1.30 / $30.00 + 0.07

    = 0.11333 or 11.33 %

Kd = Cost of Debt

     = Interest × (1 - tax rate)

     = 11% × ( 1 - 0.21)

     = 8.69 %

Weighted cost of capital =  11.33 % × 60% + 8.69 % × 40%

                                         = 10.27 %

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Answer:

"C"

Explanation:

A customer - driven environment is an organisation where customer needs are identified and all efforts are in place to ensure that these needs are met to the maximum satisfaction of the customer.

Quality and pricing are key components of this system as a customer will be attracted if he is sure of the quality of a need at a reasonable price. It does not mean it should be the cheapest and lack quality.

It has been proven to be a good way of gaining competitive edge over rivals in business.

8 0
3 years ago
What happens to each company's net income if sales increase by 20%?
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8 0
3 years ago
MegaComputers Inc., has assigned a project manager for each of the five new-product teams. The managers, as well as the project
sergij07 [2.7K]

Answer:

(E). Project

Explanation:

A <u>project</u> based organization structure is one that is created when an organization has projects to implement. This structure is <u>used to ensure the projects are run separately and smoothly, and do not interfere with each other.</u>

Each <u>project manager supervises or coordinates his team members</u> with the goal of accomplishing the objectives of the project within a given period of time.

5 0
3 years ago
Firm A is being acquired by Firm B for $35,000 worth of Firm B stock. The incremental value of the acquisition is $2,500. Firm A
LekaFEV [45]

Answer:

option (b) $34,789

Explanation:

Data provided in the question:

Worth of Firm A = $35,000

Incremental value of the acquisition = $2,500

Number of shares of Firm A outstanding = 2,000

Price of Firm A shares = $16 per share

Number of shares of Firm B outstanding = 1,200

Price of Firm B shares = $40 per share

Now,

Number of shares issued = Worth of Firm A ÷ Price per share of Firm B

= $35,000 ÷ $40

= 875 shares

Value per share after merger

= [ (1,200 × $40) + ( 2,000 × $16 ) + $2,500 ] ÷ [ 1,200 + 875 ]

= $82,500 ÷ 2,075

= $39.759

Therefore,

The Actual cost of acquisition

= Number of shares issued × Value per share after merger

= 875 × $39.7588

= $34788.95 ≈ $34,789

Hence,

The answer is option (b) $34,789

4 0
3 years ago
Journalize the entries for the following transactions
Zanzabum

Answer and Explanation:

The journal entry is shown below:

a. Cash $116,300  

       To  Sales $116,300

(Being the merchandise is sold for cash is recorded)

Cost of Merchandise Sold $72,000  

     To Merchandise Inventory $72,000

(Being the cost of the merchandise is recorded)

b. Accounts Receivable $755,000  

    To  Sales $755,000

(Being the merchandise is sold on account is recorded)

Cost of Merchandise Sold $400,000  

         To Merchandise Inventory $400,000

(being the cost of the merchandise is recorded)

c. Cash $1,950,000  

      To Sales $1,950,000

(Being the merchandise is sold for cash is recorded)

Cost of Merchandise Sold $1,250,000  

    To Merchandise Inventory $1,250,000

(Being the cost of the merchandise is recorded)

d. Cash $330,000  

     Sales  $330,000

(Being the merchandise is sold for cash is recorded)

Cost of Merchandise Sold $230,000  

       To Merchandise Inventory $230,000

(Being the cost of the merchandise is recorded)

e. Credit Card Expense $81,500  

        To Cash  $81,500

(Being cash paid is recorded)

4 0
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