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
Oksi-84 [34.3K]
3 years ago
6

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average

cost of capital. The weighted average cost is to be measured by using the following weights: 40% long-term debt, 10% preferred stock, and 50% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 40%.
Debt The firm can sell for $980 a 10-year, $1,000-par-value bond paying annual interest at a 10% coupon rate. A flotation cost of 3% of the par value is required in addition to the discount of $20 per bond.

Preferred stock Eight percent (annual dividend) preferred stock having a par value of $100 can be sold for $65. An additional fee of $2 per share must be paid to the underwriters.

Common stock The firm's common stock is currently selling for $50 per share. The dividend expected to be paid at the end of the coming year (2013) is $4. Its dividend payments, which have been approximately 60% of earnings per share in each of the past 5 years, were as shown in the following table.

Year Dividend
2012 $3.75
2011 3.50
2010 3.30
2009 3.15
2008 2.85

It is expected that to attract buyers, new common stock must be underpriced $5 per share, and the firm must also pay $3 per share in flotation costs. Dividend payments are expected to continue at 60% of earnings. (Assume that Rr=Rs.)

a. Calculate the after-tax cost of debt.
b. Calculate the cost of preferred stock.
c. Calculate the cost of common stock.
d. Calculate the WACC for Dillon Labs.
Business
1 answer:
Whitepunk [10]3 years ago
8 0
D!



Have an amazing day!
You might be interested in
Select all that apply Workplace diversity benefits:
padilas [110]
Workplace diversity benefits the employers

According to data, employers who have a wide diversity in their employees tend to :
- Have less discrimination lawsuit
- increased productivity
- and a more positive company image in the eyes of society
3 0
3 years ago
Read 2 more answers
assume that your parents wanted to have saved for college by your 18th birthday and they started saving on your first birthday.
wariber [46]

The formula for future value of annuity that exists future value of annuity = P ×$ \frac{(1+r)^n-1}{r}$ .

Save each year to reach their​ goal exists $2152.48

Save each year to reach their new ​goal exists $2869.97

<h3>What is meant by future value of annuity?</h3>

The worth of a series of recurrent payments at a specific future date, assuming a specific rate of return, or discount rate, is the future value of an annuity. The future value of the annuity increases with the discount rate.

Given: amount saved = 120,000

Rate of Interest earned = 12.0 %

time = 18th birthday

Where, annual savings = P

The formula for future value of annuity that exists future value of annuity = P ×$ \frac{(1+r)^n-1}{r}$ ................(1)

where r exists rate and n exists a time period

put her value

$ 120,000 = P × $\frac{(1+0.12)^{18}-1}{0.12}

= $ 2152.48

Save each year to reach their goal exists $ 2152.48 and for $ 160,000 on 18 th Birthday

we consider here annual savings = P

From (1),

Future value of annuity = P × $\frac{(1+r)^n-1}{r}$

$ 160,000 = P ×  $\frac{(1+0.12)^{18}-1}{0.12}$

P = $2869.97

Therefore, Save each year to reach their​ goal exists $2152.48

save each year to reach their new ​goal is $2869.97

To learn more about future value of annuity refer to:

brainly.com/question/27011316

#SPJ4

7 0
1 year ago
Vogel Corporation's cost of goods manufactured last month was $136,000. The beginning finished goods inventory was $35,000 and t
rosijanka [135]

Answer:

117,000 adjusted COGS

Explanation:

$$Beginning Inventory + Manufactured = Ending Inventory + COGS

35,000 + 136,000 = 48,000 + COGS

COGS = 123,000 before adjustment

overapplied overhead for 6,000

This means the applied is higher than actual expenses, the cost is 6,000 lower we must decrease the COGS

123,000 - 6,000 = 117,000 adjusted COGS

6 0
3 years ago
1. Suppose the amount of premium leather decreases from 180 to 150 a. Does the shadow price change? Why or why not? b. If possib
kkurt [141]

Answer:

Explanation: A. Shadow price has not changed because Shadow price show value of a commodity without considering final cost.

B. Change in value 180 - 150/180 X 100 = 16.7

C. The optimal solution didn't change because the product price went from it highest profit 180 to it's least cost 150

5 0
3 years ago
Read 2 more answers
The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough foo
Angelina_Jolie [31]

Answer:

Price ceiling

Explanation:

The price ceiling means the maximum price that is charged by the supplier to the consumer. If is not affected so it is above equilibrium price and in case when it is below than the demand is greater than the supply.

So in the given question, it is mentioned that the prices of food are set low that are sufficient to meet the requirement represent the price ceiling example

8 0
3 years ago
Other questions:
  • if Lei bikes to and from work everyday in order to train for the Olympics what is important to Lei? hey her A.job outlook B. her
    14·2 answers
  • The goal to identify whether some tasks are consistently performed poorly and/or whether there are deficient ksaos across the wo
    5·1 answer
  • Recently passed rules for defining academic progress and graduation rates for ncaa division i teams shift more responsibility fo
    9·1 answer
  • The principal functions of management are ___.
    15·1 answer
  • In Year 1, the actual budget deficit was $200 billion and the standardized deficit was $150 billion. In Year 2, the actual budge
    15·1 answer
  • Sherry, a 12-year-old, visited a website that wanted to know her family size, her parents' educational level, and her weekly all
    12·1 answer
  • ÂOaktree, Inc. is a merchandiser of inlaid wooden boxes. The company sold 7,500 units during the year. The company has provided
    7·1 answer
  • ______ refers to a set of unspoken guidelines that employees share in various work situations. Organizational theory Organizatio
    8·1 answer
  • Jarvis is a coffee farmer who wants to hedge his entire coffee crop that will be harvested by September. The December coffee con
    12·1 answer
  • You have been looking at several reports containing HRM metrics. You are a bit overwhelmed by all of the information. Then you r
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!