Bonds = 75,000*1000 = 75 Million
Preferred stock = 750,000*64 = 48 Million
Common stock = 2.5 Million *44 =110 Million
Total capital = 75+48+110 = 233 Million
Weight of debt (Wd) = 75/233 = 0.3219
Weight of preferred stock (Wp)= 78/233 = 0.206
Weight of equity (We) 1-0.3219-0.206 = 0.4721
Cost of debt after tax (Rd)= 7.5%*(1-0.34) = 4.95%
Cost of preferred stock (Rp)=6/64 = 9.375%
Cost of equity(Re) = rf + beta*(rm-rf) = 2.3+1.21*(11.2-2.3) = 13.069%
WACC = Wd *Rd + Wp*Rp + We*Re
WACC = 0.3219*4.95 + 0.206*9.375 + 0.4721*13.069% = 9.69%
Answer:
Simple interest is paid only on the original amount borrowed.
When calculating loan payments, to show a down payment toward the purchase of an asset, you must adjust the pv argument of the financial function.
What is pv argument?
The following arguments are used with the PV function rate: The interest rate per compounding period (necessary argument). The monthly interest rate on a loan with a 12% yearly interest rate and monthly payments would be 12% divided by 12 or 1%. The rate would then be 1%.
What is financial function?
In a firm, the functions used to obtain and manage financial resources in order to make a profit are referred to as the finance function. It generates pertinent financial resources and information, enhancing the effectiveness of other corporate operations and activities such as planning and decision-making.
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Consideration refers to what each party gets in exchange for his or her promise under a contract. A contract has four elements: agreement, consideration, contractual capacity, and legal object. Agreement refers to the contract itself, consideration to the results of the contract, contractual capacity represents your legal ability to sign the contract, and legal object is the purpose of the agreement.
