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Bogdan [553]
3 years ago
10

Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information: the f

irm's noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00 the company's tax rate is 40% the risk-free rate is 4.50% the market risk premium is 5.50% the stock's beta is 1.20 the target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. Daves' WACC is closest to:
Business
1 answer:
levacccp [35]3 years ago
3 0

Answer:

Explanation:

First, find the YTM of the bond (rD), you can do this with a financial calculator using the following inputs;

Maturity of the bond : N = 20

Annual coupon payment; PMT = 8%*1000 = 80

Face value; FV = 1000

Price of the bond ; PV = -1,050

then CPT I/Y = 7.51% (this is the Pretax cost of debt; the rD)

Next, find the cost of equity (rE) using CAPM;

CAPM; r = risk free + beta (Market risk premium)

rE = 0.0450 + 1.20(0.0550)

rE = 0.0450 + 0.066

= 0.111 or 11.1%

Next, WACC formula = wE*rE + wD*rD(1-tax) whereby;

w = weight of..

rD= pretax cost of debt

WACC = (0.65*0.111) + [0.35*0.0751(1-0.40) ]

WACC = 0.07215 + 0.015771

= 0.0879

Therefore, WACC = 8.79%

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VARVARA [1.3K]

The mobile network launched offers 500gb data and hotstar premium subscription is BSNL. Thus the correct option is B.

<h3>What is a Subscription?</h3>

A monthly or yearly payment submitted to be a part of any group, organization, or campaign to receive the benefits of its members is called a subscription.

A new Super Star 500 broadband plan from BSNL  which deals in mobile and mobile networks,  delivers 500GB of data at a monthly speed of up to 50Mbps along with a free Hotstar membership in this plan.

This plan of BSNL offers two plans in it which includes the DSL plan and the Bharat Fibre plan to its customers.

Therefore, option B BSNL is appropriate answer.

Learn more about Mobile, here:

brainly.com/question/14897447

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The incomplete question is -

The mobile network launched offers 500GB data and hotstar premium subscription

Airtel

BSNL

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5 0
2 years ago
Interest income received by a cash basis taxpayer is generally reported in the tax year it is received. True False
FromTheMoon [43]

Answer:

TRUE

Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.

5 0
3 years ago
Mainline Ltd. is a landline telephone manufacturer whose average return on invested capital is approximately 2 percent. Because
irinina [24]

Answer:

competitive disadvantage

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question in this scenario Mainline Ltd. has a  competitive disadvantage. This term refers to an unfavorable circumstance or condition that causes a firm to underperform in an industry. Which in this case low demand for landlines causes this.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

7 0
3 years ago
A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's una
ollegr [7]

Answer:

Bad debt expense A/c Dr  $4,900

           To Allowance for doubtful debts  $4,900

(Being bad debt expense is recorded)

Explanation:

The journal entry is shown below;

Bad debt expense A/c Dr  $4,900

           To Allowance for doubtful debts  $4,900

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= Net Credit sales × estimated percentage given  - credit balance of allowance for doubtful debts

= $920,000 × 0.6%  - $620

= $5,520 - $620

= $4,900

6 0
3 years ago
An employer can refuse to hire you if you refuse a drug screening test or background check.
Kruka [31]
Yes. this statement is true.
Why?
Because it is one of the Company's requirements to have a medical certificate before you can be deployed to their company.
If in case you will refuse to follow this order from them, they have all the authority to backout from hiring you to their comapany
8 0
3 years ago
Read 2 more answers
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