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kherson [118]
3 years ago
12

Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to

maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. What is the WACC of the firm based on the market values of debt and equity?

Business
1 answer:
Vedmedyk [2.9K]3 years ago
4 0

Answer:

Please see attachment

Explanation:

Please see attachment

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The following data are from the accounting records of Kain Company: Net income $40,000 Depreciation expense 8,000 Decrease in ac
Arada [10]

Answer:

d. $44,700

Explanation:

The preparation of the Cash Flows from Operating Activities - Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $40,000

Add : Depreciation expense $8,000

Less: Decrease in accounts payable -$1,800

Add: Decrease in merchandise inventory $2,500

Less:  Increase in accounts receivable -$4,000

Net cash flows from operating activities    $44,700

The long term liabilities and the common stock is not relevant. Hence, ignored it

8 0
2 years ago
If D 0 = $1.75, g (which is constant) = 3.6%, and P 0 = $32.00, what is the stock's expected total return for the coming year?
Contact [7]

Answer:

Stock's expected total return for the coming year is 9.27%

Explanation:

P0 = D0(1+g) / (r-g)

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32 = 1.75 * (1.036) / (r - 0.036)

32 = 1.813 / (r - 0.036)

32*(r - 0.036) = 1.813

32r - 1.152 = 1.813

32r = 1.813 + 1.152

32r = 2.965

r = 2.965 / 32

r = 0.09265625

r = 9.265625%

r = 9.27%

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A key to economic growth and development is to:
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What is generally the reason for a company to issue bonds?
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