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S_A_V [24]
3 years ago
11

Calculate the firm’s WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equ

ity from the Balance Sheet. The firm has no preferred stock).
Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project
A 7.5% percent annual coupon bond with 20 years to maturity, selling for 104 percent of par. The bonds make semiannual payments. What is the before tax cost of debt? If the tax rate is 40%, what is the after-tax cost of debt?
The firm’s beta is 1.2. The risk-free rate is 4.0% and the expected market return is 9%. What is the cost of equity using CAPM?
Business
1 answer:
tester [92]3 years ago
7 0

Answer:

Before tax cost of debt is 7.12%

After tax cost of debt is 4.27%

Cost of equity is 10%

Explanation:

The before-tax cost of debt can be determined using excel rate formula as found below:

=rate(nper,pmt,-pv,fv)

nper is the number of semiannual payments the bond has i.e 20*2=40

pmt is the amount of semiannual payment=$1000*7.5%*6/12=$ 37.50  

pv is the current price =$1000*104%=$1,040.00  

fv is the face value of $1000

=rate(40,37.50,-1040,1000)=3.56%

The 3.56% is semiannual yield, hence 7.12% per year (3.56%*2)

After-tax cost of debt=7.12%*(1-t) where is the tax rate of 40% or 0.4

after-tax cost of debt=7.12%*(1-0.40)=4.27%

Cost of equity is determined using the below CAPM formula:

Ke=Rf+Beta*(Mr-Rf)

Rf is the risk free rate of 4%

Beta is 1.2

Mr is the market return of 9%

Ke=4%+1.2(9%-4%)=10.00%

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Which neca committee is responsible for the production of the magazine the quality connection?
OverLord2011 [107]
The correct answer is <span>NLMCC- National Labor Management Cooperation Committee.
This magazine is NLMCC's flagship publication, because there all of its goals can be found. Construction members and other contractors are people who receive it and read it. 
</span>
4 0
3 years ago
Equilibrium price is $8 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 150 units of output. At
Ghella [55]

Answer:

Shut down

$1650

$1500

Explanation:

A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

in the shut run, a perfect competition should shut down if average variable cost is greater than price. this is the case for this firm $10 is greater than $8.

total fixed cost = average fixed cost x quantity produced = $11 x 150 = $1650

Total variable cost = average variable cost x quantity produced = $10 x 150 = $1500

4 0
3 years ago
When Honda, a Japanese auto maker, built a factory in Ohio,
Evgesh-ka [11]

Answer:

A) it was engaged in foreign direct investment.

Explanation:

Foreign Direct Investment is a term used in business-related operations that describes a kind of investment made by an investor in a country other than the actual or original country of the investor. It can be either business operations or business assets in a different firm in another country.

Hence, in this case, when a Japanese automaker, built a factory in Ohio, it was engaged in foreign direct investment. Therefore, the correct answer is option A.

4 0
3 years ago
Mauro Products distributes a single product, a woven basket whose selling price is $21 per unit and whose variable expense is $1
Grace [21]

Answer:

1. Break even points in units will be =  2,700 units

2. Break-even point in dollar sales = $56,700

3. In case fixed expense increase by $600 then Break even point in unit sales = 2,900 units

Explanation:

Break even point = \frac{Fixed Cost}{Contribution per unit}

Fixed Cost = $8,100

Contribution per unit = Sale Price - Variable Cost = $21 - $18 = $3

1. Break even points in units will be

= \frac{8,100}{3} = 2,700 units.

2. Break-even point in dollar sales

= Break even point in units X Sale price per unit

= 2,700 units X $21 = $56,700

3. In case fixed expense increase by $600 then Break even point in unit sales

= \frac{8,100 + 600}{3} = 2,900 units

Final Answer

1. Break even points in units will be =  2,700 units

2. Break-even point in dollar sales = $56,700

3. In case fixed expense increase by $600 then Break even point in unit sales = 2,900 units

3 0
3 years ago
Quintina decided to increase the deduction percentage of her federal income tax rate from 14% to 16%. Quintina’s gross pay per m
Papessa [141]

Answer:

$1555

Explanation:

3 0
3 years ago
Read 2 more answers
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