Answer:
WACC = 5.32%
Explanation:
bond's YTM = 8%
cost of equity = 10%
tax rate = 40%
total bonds = $900,000,000
total common stocks = $100,000,000
total firm's value = $1,000,000,000
to simplify the process I will use hundreds of millions
WACC = (1/10 x 10%) + [9/10 x 8% x (1 - 40%)] = 1% + 4.32% = 5.32%
Answer:
How much may Adrian deduct?
This depends on whether the museum is private or not. If the museum belongs to a public charity or a university, then Adrian can deduct full fair market value = $35,000. Since Adrian's AGI is $80,000, she could donate up to $40,000 (half her AGI).
But if the museum is a private organization, then Adrian can deduct only her basis in the vase = $15,000
How would your answer to Part a change if, instead of displaying the vase, the museum sold the vase to an antique dealer?
Once you donate artwork, unless you strict prohibit the museum from selling it, then they can sell it and you cannot do anything about it. Some donors specific certain terms for their donations, e.g. artwork cannot be sold and it must be exhibited at least a certain amount of time, in certain places, etc. But if Adrian didn't include any clause on her donation, then whatever happens to the vase is up to the museum.
Currently, museums are less likely to accept restricted donations, unless of course the artwork is worth it.
There will be loss due to the interest of the amount borrowed just to compensate or supplement their existing reserves.
Total money borrowed is $100 + ($100*%interest)
This strategy of the owner is not good and may result to more money loss than gaining more profit.
Answer:
Amount paid for goodwill=5.3 million
Explanation:
The expression for calculating goodwill is given by;
Goodwill = Consideration paid– Fair value of net identifiable assets
where;
Consideration paid=$12.5 million
Fair value of net identifiable assets=Midwest's assets-Midwest's liabilities
Midwest's assets=$8.5 million
Midwest's liabilities=$1.3 million
Fair value of net identifiable assets=(8.5 M-1.3 M)=7.2 million
Replace in the expression below;
Goodwill = Consideration paid– Fair value of net identifiable assets
Goodwill=12.5 M-7.2 M
Goodwill=5.3 million
Answer:
$5,506.14
Explanation:
In calculating the value of your investment at the end of the decade, we will use the formula below
A = P [1 + (R / 100)]^n
A = Total investment amount at the end of the decade, P = Principal amount invested, R = Annual interest rate in percentage, and N = Years
P = 1,000 , R = 18.6%, N = 10
A = $1,000 *(1 + 18.6%)^10
A = $1,000 *(1+0.186)^10
A = 1$,000*(1.186)^10
A = $1,000*5.506135
A = $5506.135
A = $5,506.14
Hence, the value of the investment at the end of the decade will be $5,506.14
