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baherus [9]
3 years ago
11

1. Peter's Audio Shop has a before-tax cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The fir

m has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the weighted average cost of capital for Peter's Audio Shop?
Business
1 answer:
tia_tia [17]3 years ago
7 0

Answer:

9.14%

Explanation:

The computation of the weighted average cost of capital is shown below:-

Debt = $500,000 × 1.02

= $0.51 m

Preferred = 40,000 × $34

= $1.36 m

Common = 104,000 × $20

= $2.08 m

Total = $0.51 m + $1.36 m + $2.08 m

= $3.95 m

So, Weighted average cost of capital = ($2.08 ÷ $3.95 m × 0.11) + ($1.36 m ÷ $3.95 m × 0.08) + (($0.51 m ÷ 3.95 m × 0.07 × (1 - 0.34))

= 0.057924 + 0.027544 + 0.005965

= 0.091433

or 9.14%

Therefore for computing the weighted average cost of capital we simply applied the above equation.

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our individuals form a business and create a contract to divide the profits equally among the four. Gary invests $11,000, Neil i
Sedbober [7]

Answer:

$800

Explanation:

The computation is shown below:

First we have to determine the total amount invested that is shown below:

= $11,000 + $4,000 + $5,000 + $8,000

= $28,000

And, the profit is $5,600

So, the percentage is

= $5,600 ÷ $28,000

= 0.2

Now the Gary share is

= $11,000 × 0.2

= $2,200

And, each share in profit

= $5,600 ÷ 4

= $1,400

Now the final amount is

= $2,200 - $1,400

= $800

6 0
3 years ago
Drum buffers are:
maks197457 [2]

Answer: Extra safety that is applied to a project immediately before the use of the constrained resource.(D)

Explanation:

Drum buffer can be explained as period of time that is used to safeguard the drum resource from the problems that occur from the drum operation.

The aim of the drum buffer effect is to provide a recheck of the work in order not to deviate from the real aim of the project. The buffer makes up for the process variation, and makes the project stable as it gives extra safety which is applied mmediately before using constrained resource.

6 0
3 years ago
Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instea
vladimir1956 [14]

Answer:

see below

Explanation:

A firm may either opt to shutdown or declare bankruptcy if its making losses.  A shutdown will involve ceasing operations and disposing of assets to pay creditors. Declaring bankruptcy shields the business from debt obligations or seizing of assets by its creditors.

Many businesses opt to declare bankruptcy because shutting down is costly. Except for properties, other assets are likely to be liquidated at costs below their book value. With the burden of debts shelved for some time, a business has a chance of bouncing back to profitability. A loss-making firm whose price is above the average variable cost should continue operating.

3 0
2 years ago
An indifference curve illustrates ... a) how consumers are indifferent about the location of their own consumption levels relati
Leya [2.2K]

Answer:

Option c) how a consumer might trade off different levels of consumption of each of two goods, while staying at the same utility level.

Explanation:

This is the very definition of an indifference curve. The points in an indifference curve are the combinations of the quantities (level of consumption) of two different goods which will produce the very same utility to the consumer. The consumer will perceive any of those combinations as having the same utility for him.  

For example, a usual graph of various indifference curves will look like the graph attached.

In this graph the combination of 2 pairs of shoes and 15 pants will be perceived as having the same utility as the combination of 5 pairs of shoes and 4 pants. Both are combinations in the same indifference curve, the green one, and the utility of any combination lying in that green curve will be rated the same: u = 1.

8 0
3 years ago
for fannie mae, appraisals of manufactured homes in a condominium project are to be reported on the form and modular homes are t
BARSIC [14]

For Fannie Mae appraisals of manufactured homes in a condominium project are to be reported on the The <u>1004C</u>  form.

For Fannie Mae appraisals of modular homes are to be reported using <u>the standard URAR form.</u>

<h3>What is Fannie Mae appraisals?</h3>

Fannie Mae is known to be a firm that helps to guide one through appraisals. The appraisal is one that is often used to talk or judge the property in regards to its acceptability for the mortgage loan  that is often requested because of its value as well as its marketability.

Therefore,  For Fannie Mae appraisals of manufactured homes in a condominium project are to be reported on the The <u>1004C</u>  form. For Fannie Mae appraisals of modular homes are to be reported using <u>the standard URAR form.</u>

Learn more about appraisals from

brainly.com/question/7595736

#SPJ1

5 0
1 year ago
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