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11Alexandr11 [23.1K]
3 years ago
14

Initech has 7 million shares of common stock outstanding and 50,000 bonds outstanding. The bonds pay semi-annual coupons at an a

nnual rate of 9.05%, have 6 years to maturity and a face value of $1,000 each. The common stock currently sells for $30 a share and has a beta of 1. The bonds sell for 94% of face value and have a 10.42% yield to maturity. The market risk premium is 5.5%, T-bills are yielding 5% and the tax rate is 30%. What is the firm's capital structure weight for debt
Business
1 answer:
zhannawk [14.2K]3 years ago
6 0

Answer:

The firm's capital structure weight for debt is 18.29%

Explanation:

Common stock outstanding = 7 million shares

Outstanding bonds = 50,000 bonds

Calculating Value of Equity,

Total Equity = 7 million × $30 = $210 million

Calculating Value of Debt,

Total Debt = 50,000 × 1,000 × 0.94 = $47 million

Weight of Debt = 47 million ÷ (210 + 47 ) million

Weight of Debt = 18.29%

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g announced that it plans to cut its dividend from $2.50 to $1.50 per share (next year) and use the extra funds to expand its op
mote1985 [20]

Answer:

The value of the Share of Zeke after the new Expansion is $25.

Explanation:

As there was no growth in the dividend before change, Price of the share from a stable dividend payment can be calculated by following formula.

Price  = Dividend / Required rate of return

As we have the share price and the dividend amount we need to calculate the required rate of return.

Required rate of return = Dividend / Price

Placing value in the formula

Required rate of return = $2.50 / $25.00 = 0.1 = 10%

After New Expansion

Dividend = $1.50

Growth rate = 4%

The share price can be calculated by the dividend growth formula, as follow

Price of share = Dividend / (Rate of return - growth rate)

Price of share = $1.50 / (10% - 4%)

Price of share = $1.50 / 6%

Price of share = $25

7 0
3 years ago
MC Qu. 98 At the beginning of the recent... At the beginning of the recent period, there were 1,470 units of product in a depart
agasfer [191]

Answer:

Using the weighted average method, the equivalent units produced by the department were:

= 8,760 units.

Explanation:

a) Data and Calculations:

                                         Units    Conversion  

 Ending inventory             1,560

Units completed             8,370

Units available                9,930

Beginning inventory        1,470         35%

Additional units started 8,460

Equivalent units of production:

Units completed            8,370         8,370 (100%)

Ending inventory           1,560            390 (25%)

Equivalent units of production       8,760

4 0
3 years ago
In one of the training sessions in your company, you notice several members are not from the United States. These members are al
Alja [10]

Answer:

Go-round

Explanation:

It is not uncommon that some people can be reticent and not contributing to discussion during a session. This does not mean that such people do not have anything to contribute but may just be shy .

One technique to encourage these members to express their opinion is by employing the go - round discussion method. This can give them the courage to voice their opinion when it is their turn to speak

5 0
3 years ago
At December 31, 2022, the following information (in thousands) was available for Ayayai Inc.: ending inventory $22,000; beginnin
Anuta_ua [19.1K]

Answer:

Inventory turnover in days = 43.59 days

Inventory turnover (No of times)=  8.37 times

Explanation:

<em>Inventory turnover days is the average length of time it takes a business to sell its inventory before replacement.</em>

Inventory turnover in days

= Average inventory /Cost of goods sold × 365 days

<em>Average inventory = (Opening Inventory + closing inventory)/2</em>

<em>Average inventory </em>

= (21,000 + 22,000)/2

= 21,500

<em>Inventory turnover in days</em>

(21,500/180,600) × 365 days

=43.597 days

Inventory turnover (No of times )

= Cost of goods sold/Average inventory

=  180,600/21,500

= 8.37 times

4 0
3 years ago
Jensen Co. expects to pay €50,000 in one month for its imports from France. It also expects to receive €200,000 for its exports
Julli [10]

Answer:

-$5,873

Explanation:

For computation of maximum one month loss in dollars first we need to find out the net exposure and maximum one month loss in percentage which is shown below:-

Net exposure = Received amount - Paid amount

= €200,000 - €50,000

= €150,000

Maximum one - month loss in Percentage = Next month percentage - (Alpha × Euro percentage)

= 2% - (1.96 × 2.5%)

= -2.9%

Maximum one - month loss in Dollars = Net exposure × Current spot rate of the euro × Maximum one - month loss in Percentage

= €150,000 × $1.35 × (-0.029)

= -$5,873

5 0
2 years ago
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