Suppose tickets for a regular seat at Super Bowl XXXVII cost just $500 when bought at face value (the cost at the box office). S
1 answer:
You might be interested in
Answer:
WACC 6.18%
Explanation:
to get the cost of capital we solve using the gordon model:
D1 1.55
P 28
f 0.00
g 0.02
Ke 0.075357143
Then for the cost of debt, we need to calculate the YTM of the bonds:
which is the rate at which the present value of the coupon payment and maturity equals the market price:
For the complexity this is done with excel or a financial calculator there is also an approximation formula
YTM with excel: 0.073516565
now that we good this we need to determinate the weigth of equity and debt:
250,00 shares x 28 dollars each = 7,000,000
1,500 bonds of $1,000 each at 98% = 7,350,000
value of the company: 7,000,000 + 7,350,000 = 14,350,000
Ew: 7,000,000 / 14,350,000 = 0.487804878
Dw: 7,350,000 / 14,350,000 =0.512195122
Now we got all values and we can determinate the WACC:
Ke 0.075357143
Equity weight 0.487804878
Kd 0.074
Debt Weight 0.512195122
t 0.34
WACC 0.0617752 = 6.18%
Answer:
Rate is 1.5 times the straight line depreciation rate which is;
=
= $10,000 per year
Rate = * 100%
=12.5%
Reducing balance rate = 12.5% * 1.5
= 18.75%
The Depreciation Schedule would be;
Year Beginning Book Value Depreciation Expense Accumulated Depreciation Book Value
1 $80,000 80,000*18.75% = $15,000 $15,000 $65,000
2 $65,000 65,000 * 18.75% = $12,1875.50 $27,187.50 $52,812.50
3 $52,812.50 52,812.5 *18.75% = $9,902.34 $37,187.84 $42,910.16
4 $42,910.16 42,910.16 * 18.75% = $8,045.66 $45,233.50 $34,766.50
5 $34,766.50 34,766.50 * 0.1875 = 6,518.72 $51,752.22 $28,247.78
6 $28,247.78 28,247.78 * 0.1875= $5,296.45 $57,048.67 $22,951.33
7 $22,951.33 22,951.33 * 0.1875= 4,403.37 $61,452.04 $18,547.96
8 $18,547.96 18,547.96 * 0.1875 = $3,477.74 $80,000 $0
$3,477.74 + 15,070.22= $18,574.96
Depreciation for the last year was not sufficient to take the truck to $0 so the remainder will be depreciated in that year so that it may be completely depreciated.
