Answer:
14.90%
Explanation:
We know,
Current stock price, =
Given,
Current stock price, = $12.00
growth rate, g = 9.50% = 0.095
Expected annual dividend, = $0.65
We have to determine the expected rate of return ().
Putting the values into the above formula, we can get,
Current stock price, =
or, $12.00 = $0.65 ÷ ( - 0.095)
or, $12.00 × ( - 0.095) = $0.65
or, - 0.095 = $0.65 ÷ $12.00
or, - 0.095 = 0.0542
or, = 0.054 + 0.095
Therefore, = 0.149
The expected rate of return = 0.149 or 14.90%
Answer:
would decrease.
Explanation:
The computation is shown below:
As we know that
Contribution = Sales - Variable Expenses
And,
PV Ratio = Contribution margin ÷ Sales
So, PV Ratio of C90B is
= ($24,000 - $6,480) ÷ $24,000
= 73%
And PV Ratio of Y45E is
= ($29,000 - $11,010) ÷ ($29,000)
= 62.03%
It increases in overall PV ratio also overall contribution would be more that reduced the break even point
Answer:
(a) 8.90%
(b) 3.00%
Explanation:
(b) After tax cost of debt:
= pretax cost of debt (1 - relevant tax rate)
= 5% × (1 - 0.4)
= 3.00%
(a)
Equity:
Market value = 65
weight = 0.65
WACC = weight × cost of equity
= 0.65 × 0.12
= 7.80%
Preferred stock:
Market value = 5
weight = 0.05
WACC = weight × cost of equity
= 0.05 × 0.04
= 0.20%
Debt:
Market value = 30
weight = 0.30
WACC = weight × cost of equity (after tax)
= 0.30 × 0.03
= 0.90%
Therefore,
Mullineaux’s WACC:
= 7.80% + 0.20% + 0.90%
= 8.90%
Answer:
$2 billion
Explanation:
Foreigners spend $7 billion on U.S net exports
Americans spend $5 billion on imports
Therefore the value of U.S net exports can be calculated as follows
= $7 billion-$5billion
= $2 billion
Hence the value of U.S net exports is $2 billion