Answer:
Option (C) is correct.
Explanation:
We have to use MM proposition that cost of equity will change itself in such a manner so that it can take care of its debt.
Cost of equity:
= WACC of all equity firm + (WACC of all equity - Cost of debt ) × (Debt -to-equity ratio)
At the beginning, when there was no debt,
WACC = cost of equity = 12 %
Levered cost of equity:
= 12% + ( 12% - 6%) × 0.5
= 15%
Therefore, Rearden's levered cost of equity would be closest to 15%.
Answer:
8%
Explanation:
Calculation to determine the stated annual rate of interest on the bonds
First step is to calculate Semi annual coupon rate
Semi annual coupon rate= 400 ÷ $10,000
Semi annual coupon rate= 4%
Now let determine the Annual rate of interest
Annual rate of interest= 4% × 2 (Semiannually)
Annual rate of interest= 8%
Therefore the stated annual rate of interest on the bonds is 8%
<span>Consumer Financial Protection Bureau (CFPB)</span>
Answer:
Income statement.
Explanation:
The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the Income statement.
Income statement is one of the most important financial statement used to analyze the financial performance of the company. It show the revenue and expense of the company in the particular period of time. It help the management to understand the profitablity of the company during specified period of time. The other two important financial statement are Balance sheet and statement of cash flow.
Answer:
D. Operating activities.
Explanation:
A financial statement is a written report that quantitatively describes a firm's financial health. Under the financial statements is a cash-flow statement, which is used to record the cash inflow and cash equivalents leaving a business firm.
Cash flow statement, also known as the statement of cash flows, contains financial information about operating, financial and investing activities.
Hence, activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as operating activities. All the net income or cash from all operational business activities of a company is recorded as operating activities.
