1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Rom4ik [11]
3 years ago
9

has a target debt−equity ratio of 1.35. Its WACC is 8.3 percent, and the tax rate is 35 percent. If the company’s cost of equity

is 14 percent, what is its pretax cost of debt? (Do not round intermediate calculations. Enter yo
Business
1 answer:
dsp733 years ago
5 0

Answer:

5.74%

Explanation:

WACC = weight of equity x cost of equity +  weight of debt x cost of debt x (1 - tax rate)

weight of debt =  D / (D + E) = 1.35/ (1.35 + 1) = 0.574468 = 57.4468%

weight of equity = 100% - 57.4468% = 42.5532%

let x represent pretax cost of debt

8.1% = 0.425532 x 14% +( 0.574468x) x 0.65

8.1% = 0.373404x + 5.957448%

solve for x

x = 5.74%

You might be interested in
Describing matter worksheet physical property that makes metal pots good for cooking is
bulgar [2K]

The physical property that may be able to provide a beneficiary for metal pots as a source of good cooking is its heat conductivity of which allow this material to be conducted to heat and allows the food to be cooked thoroughly making it good for cooking.

5 0
2 years ago
Brunette Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $180,000. Th
diamong [38]

Answer:

No,  as the net present value comes in negative

Explanation:

As we know that

Net present value = Present value of cash inflows - Initial investment

where,

Present value os $163,000

And, the initial investment is $180,000

Now placing these values to the above formula

So, the net present value is

= $163,000 - $180,000

= -$17,000

Therefore the company should not accept the project as net present value is in negative that is -$17,000

6 0
3 years ago
Assume there are only three possible states of nature for the economy in the future: boom, normal, and recession. If there is a
BartSMP [9]

Answer:

a. 45%

Explanation:

The sum of total probabilities  is always equal to 1. Since in the given question only three probabilities are given, so the sum of these three probabilities shall be 1 which is represented as follows by the equation:

probability of boom+probability of normal+probability of recession=1

In the given question:

probability of boom=30%

probability of recession=25%

30%+probability of normal+25%=1

Probability of normal=1-25%-30%=45%

So based on the above calculations, the answer shall be a. 45%

7 0
3 years ago
As it relates to international trade, dumping: A. is defined as selling more goods than allowed by an import quota. B. constitut
amid [387]

Answer:

C. is the practice of selling goods in a foreign market at less than cost.

Explanation:

As it relates to international trade, dumping <u>is the practice of selling goods in a foreign market at less than cost</u>. Dumping is the practice of selling a product in a foreign market at an unfairly low price (a price that is lower than the cost in the home market) or in order to gain some advantage over the other suppliers.

6 0
3 years ago
How to deal with mean student evaluation?
katrin [286]
I would say just stop being around them and don't speak or talk about them if u dont wanna be they topic
4 0
3 years ago
Other questions:
  • Wilson Corporation produces a large number of fishing products. The costs per unit of a particular fishing reel are as follows.
    14·1 answer
  • An applicant for an individual health policy failed to complete the application properly. Before being able to complete the appl
    10·1 answer
  • If Sheridan Company issues 7500 shares of $10 par value common stock for $375000, the account Paid-in Capital in Excess of Par V
    13·1 answer
  • What is the difference between advertising and personal selling
    5·1 answer
  • On the day Harry Potter was born, his parents deposited 78,000 galleons in the Gringotts Wizarding Bank. Assume that the bank pr
    14·1 answer
  • kayak company uses a job order costing system &amp; allocation on the basis of direct labor costs. kayak company's production co
    5·1 answer
  • Suppose there are only two firms that sell smart phones, Flashfone and Pictech. The following payoff matrix shows the profit (in
    15·1 answer
  • Some people view cosmetic surgery (c) and facials (f) as perfect substitutes as measured by the utility function U(c,f) = 5c + 1
    15·1 answer
  • Blossom Company had the following transactions involving notes payable. July 1, 2020 Borrows $61,000 from First National Bank by
    8·1 answer
  • Journal entries of hari started business with cash and goods​
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!