All categories

3 years ago

You are given the following information for Lightning Power Co. Assume the company's tax rate is 35 percent.

Business

1 answer:

olga55 [171]3 years ago

5 0

Answer:

The company's WACC is 9.14%

Explanation:

cost of preferred stock

= (dividend on preferred stock)/(current market price)

= [$100*4%]/$72

= 5.56%

total finance = debt + equity + preferred stock

= (8,000*$1,060) + (310,000*$57) + (15,000*$72)

= $8,480,000 + $17,670,000 + $1,080,000

= $27,230,000

weight of debt = debt/total finance

= $8,480,000/$27,230,000

= 0.31

weight on equity = equity/total finace

= $1.080.000/$27,230,000

= 0.04

WACC

= (weight of debt*after tax cost of debt) + (weight on equity*cost of equity)

= (0.31*0.0393) + (0.65-0.1185) + (0.04*0.0556)

= 9.14%

Therefore, The company's WACC is 9.14%

You might be interested in

Suppose in the short run a firm’s production function is given by Q = L 1 2 K 1 2 and that K is fixed at K = 10. If the price of

Furkat [3]

The firm’s marginal cost of production when the firm is producing 50 units of output is 33.33

Solution:

The production function is Q = $\sqrt{L * K}$

The initial value is 10 units. The production value is 50 units The manufacturing cycle needs work as stated below.

Q = $\sqrt{L * K}$

Q = $\sqrt{L * 10}$

L = $(\frac{Q}{3.162} )^{2}$

The wage rate is $15 . The following is the expense of the manufacturing process.

TC = $P_{L} * L + P_{K} * K$

TC = $( 15 * (\frac{Q}{3.162} )^{2} ) + [ P_{k * 10}]$

The marginal production cost is really the increase in manufacturing costs as output increases by 1 point.

As listed below, the marginal cost:

TC = $( 15 * (\frac{Q}{3.162} )^{2} ) + [ P_{k * 10}]$

MC = $\frac{TC}{Q}$ = $\frac{2Q}{3}$

MC = $\frac{2*50}{3}$ = 33.33

6 0

3 years ago

What two trends in the past decade have significantly influenced global marketing?

SOVA2 [1]

The two trends that influenced global marketing in the last decade were:

Formal economic integration.

Free trade between nations.

Global marketing can be defined as a management strategy for organizations that also market their products and services in foreign countries.

Globalization has enabled formal economic integration and free trade between nations, and has created the possibility for companies to increase their profitability and market share.

As an example, we can mention the fast-food chain <em>Mc Donalds,</em> which has a presence almost all over the world, but which adapts its burgers according to local habits.

Therefore, a global company must adopt global marketing, that is, adapt to local customs, culture and preferences for the business to be successful.

Learn more here:

brainly.com/question/1528741

4 0

2 years ago

HELPPP Why do many business owners avoid market research? Question 14 options: They're afraid of hearing any negative feedback.

sweet-ann [11.9K]

Answer:

they are afraid of hearing any negative feedback

6 0

2 years ago

In the absence of environmental or safety laws in the locality where it operates, what responsibility does a U.S. corporation ha

Elden [556K]

Answer:

1. Moral and ethical responsibility

2. No

3. Lawsuit may be involved

Explanation:

1. Every US company apart from environmental or safety laws in the locality where it operates, have a moral and ethical responsibility to do what is right in terms of safe work practices and product safety/quality.

2. Even though some countries may have less strict laws than the US, moral and ethical responsibility should always thrive. For example, China is known to have less strict manufacturing standards than the United States, however this does not justifies a company to practice unsafe manufacturing standards.

3. For corporations selling products overseas that are banned in the United States, such as DDT to countries that were known to still allow it sales such as India, and North Korea. A lawsuit against those corporations may be considered legal.

8 0

3 years ago

Price ceilings may be imposed if: A. suppliers can make strong moral or political arguments for higher prices. B. demanders can

Nat2105 [25]

Answer:

C. Demanders can make strong moral or political arguments for lower prices.

Explanation:

This explained as a legal price limit set by the government on the sellers in a way to be a protection means to the buyers. This will general control some serial hike and outrageous price on some goods and services.

Its effects are of different types; firstly, price ceiling can create huge market efficiencies in a long run and also causes hoarding of products and springing up of black markets and other hook and crook forms of marketing and this is known to cause unrest in the supply side. When these keeps pulling on, it has a negative effect on the economy of the said nation.

6 0

3 years ago