Answer:
a.Year Cashflow [email protected]% PV [email protected]% PV
$ $ $
0 (1,000) 1 (1,000) 1 (1,000)
1-15 72 11.1184 800 7.6061 548
15 1,000 0.5553 555.3 0.2394 239
NPV 355.3 NPV 213
Kd = LR + NPV1/NPV1 + NPV2 x (HR – LR)
Kd = 4 + 355.3/355.3 + 218 x (10 – 4)
Kd = 4 + 355.3/573.3 x 6
Kd = 7.72%
b. Kp = D/Po
Kp = $100/$1,111
Kp = 0.09 = 9%
c. Ke = D1/Po (1 – FC) + g
Ke = $4.3995/$50(1-0.15) + 0.05
Ke = $4.3995/$42.50 + 0.05
Ke = 0.1535 = 15.35%
WACC = Wdrd(1 – T) + Wprp + Were
WACC = 0.3(7.72)(1-0.4) + 0.1(9) + 0.6(15.35)
WACC = 1.39 + 0.9 + 9.15
WACC = 11.44%
Explanation:
In this case, we need to calculate cost of debt, cost of preference shares and cost of equity. Cost of debt is calculated based on internal rate of return. Cost of preferred stock is the ratio of dividend paid to the market price. Cost of equity is a function of D1 divided by current market price after floatation cost plus growth rate. WACC is equal to cost of each source multiplied by respective weights.
Answer:
The journal entry is as follows:
Cash A/c Dr. $2,020,000
Discount on bonds payable A/c Dr. $59,216
To Bonds payable $2,000,000
To Paid in capital - stock warrants $79,216
(To record the issuance of the bonds and warrants)
Workings:
Cash:
= 2,000 × $1,000 × 101%
= $2,020,000
Discount on bonds payable:
= 2,000,000 - 2,020,000 × (980 ÷ 1,020)
= $59,216
Answer:
Money supply increase=500000/10%=5000000
Explanation:
Answer:
The Journal entry with their narrations is shown below:-
Explanation:
The Journal entry is shown below:-
Cash Dr, $1,200
Notes Receivable Dr, $2,800
To Accounts Receivable -R. Roy $4,000
(Being office supply of Vikram is recorded)
Therefore for recording the office supply we simply debited cash and notes receivable and credited the accounts receivable
