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Whitepunk [10]
3 years ago
8

Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in c

apital by issuing $750,000 of debt at a before-tax cost of 10.2%, $78,000 of preferred stock at a cost of 11.4% amd $880,000 of equity at a cost of 14.3%. The firm faces a tax rate of 40%. What will be the WACC for this project?
Business
1 answer:
Sedaia [141]3 years ago
6 0

Answer:

11.25%

Explanation:

Tunbull Co. are planning to start a project that requires an initial investment of $1,708,000

The firm is able to raise $1,708,000 in capital by issuing an amount of $750,000 in debt

Before-tax cost is 10.2%

Preferred stock is $78,000 at 11.4%

The equity is $880,000 at a cost of 14.3%

Tax rate is 40%

The first step is to calculate the weight of preferred stock, weight of debt, weight of equity and after-tax cost of debt.

(a)Weight of preferred stock

= $78,000/$1,708,000

= 0.0457

(b)Weight of debt

= $750,000/$1,708,000

= 0.04391

(c) weight of equity

= $880,000/$1,708,000

= 0.5152

(d) After-tax cost of debt

= 10.2% × (1-25/100)

= 10.2% × ( 1-0.25)

= 10.2%×0.75

= 7.64

Therefore, the wacc can be calculated as follows

Wacc= (weight of debt×after-tax cost)+(weight of preferred stock×cost of preferred stock)+(Weight of equity×cost of equity)

= (0.4391×0.0765)+(0.0457×0.1140)+(0.5152×0.1430)

= 0.03359+0.0052+0.07367

= 0.1125×100

= 11.25%

Hence the wacc for this project is 11.25%

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Rico does not work for Street Bikes Company, but wrongfully obtains inside information concerning the firm. Based on the informa
Juli2301 [7.4K]

Answer: The misappropriation theory

Explanation:

 The misappropriation theory is basically describe about the various types of security fraud violation against the data source.

It is basically uses for the insider trading and when the individual person misusing the confidential data or information and also violating all the securities laws.

According to the question, the given argument is basically describe about the misappropriation theory.

Therefore, The misappropriation theory is the correct answer.  

5 0
3 years ago
In collaborative problem solving, it is important for the initiator to:
Solnce55 [7]

Answer:

The correct answer is B

Explanation:

Collaborative Problem Solving is the tool or a technique which is used for solving the problems and it makes the explicit respond.

The initiator is the person who initiates the response in the problem in order to solve the problems.

So, the vital as well as primary thing for the initiator is to avoid making the evaluative or measured conclusions as well as attribute the motives or purpose to the respondent, whose query it is.

3 0
3 years ago
Breakin Away Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll inform
alekssr [168]

Answer:

Gross pay:

  • consultant $4,000
  • computer programmer $3,300
  • administrator $2,800

Net pay:

  • consultant $2,767.98
  • computer programmer $2,295.48
  • administrator $1,993.98

Explanation:

                                           regular earnings     overtime    withholding  

                                                                                              allowances

Consultant                        $4,000 per week       N/A                2

Computer programmer          $60 per hour        1.5                  1

Administrator                          $50 per hour          2                  2

computer programmer worked 50 hours = ($60 x 40) + ($60 x 10 x 1.5) = $3,300

administrator worked 48 hours = ($50 x 40) + ($50 x 8 x 2) = $2,800

Social security taxes:

  • Consultant = 6% x $4,000 = $240                        
  • Computer programmer = 6% x $3,300 = $198        
  • Administrator = 6% x $2,800 = $168

Medicare taxes:

  • Consultant = 1.5% x $4,000 = $60                        
  • Computer programmer = 1.5% x $3,300 = $49.50        
  • Administrator = 1.5% x $2,800 = $42

Federal income taxes:

  • Consultant: amount subject to withholding = $4,000 - (2 x $75) = $3,850. Federal income taxes = $356.90 + [28% x ($3,850 - $1,796) = $932.02                        
  • Computer programmer = amount subject to withholding = $3,300 - (1 x $75) = $3,225. Federal income taxes = $356.90 + [28% x ($3,225 - $1,796) = $757.02            
  • Administrator = amount subject to withholding = $2,800 - (2 x $75) = $2,650. Federal income taxes = $356.90 + [28% x ($2,650 - $1,796) = $596.02  

Gross pay:

  • consultant $4,000
  • computer programmer $3,300
  • administrator $2,800

Net pay:

  • consultant $4,000 - ($240 + $60 + $932.02) = $2,767.98
  • computer programmer $3,300 - ($198 + $49.50 + $757.02) = $2,295.48
  • administrator $2,800 - ($168 + $42 + $596.02) = $1,993.98
6 0
3 years ago
On January 1, 2018, Brussels Enterprises issues bonds at par dated January 1, 2018, that have a $3,400,000 par value, mature in
pashok25 [27]

Answer:

a. Record the entry for the issuance of bonds for cash on January 1, 2018.

January 1, 2018, bonds are issued

Dr Cash 3,400,000

    Cr Bonds payable 3,400,000

b. Record the entry for the first semiannual interest payment on June 30, 2018.

June 30, 2018, first coupon payment

Dr Interest expense 153,000

    Cr Cash 153,000

c. Record the entry for the second semiannual interest payment on December 31, 2018.

December 31, 2018, second coupon payment

Dr Interest expense 153,000

    Cr Cash 153,000

d. Record the entry for the maturity of the bonds on December 31, 2021 (assume semiannual interest is already recorded).

December 31, 2021, payment of bonds payable

Dr Bonds payable 3,400,000

    Cr Cash 3,400,000

6 0
3 years ago
If a firm is interested in improving their human capital which are they most likely to consider
Levart [38]

Answer:

To create human capital in a company, it is mainly necessary to capture it (recruit and select it) and retain it (make it stay in the organization).

Explanation:

First, to be able to recruit competitively, the organization has to work its corporate brand.

Secondly, there must be efficient and current recruitment processes. Recruitment is the process of attracting talent to the selection processes.

Once the worker is incorporated into the company, strategies must be used to improve talent retention and team performance.

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3 years ago
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