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Mice21 [21]
3 years ago
6

Calculate the opportunity cost of capital for a firm with the following capital structure: 30% preferred stock, 50% common stock

and 20% debt.The firms has a cost of debt of 7.87%, a cost of preferred stock equal to 10.76% and a 13.91% cost of common stock. The firm has a 35% tax rate. You answer should be entered as a %, for example 15.48%
Business
1 answer:
expeople1 [14]3 years ago
5 0

Answer:

11.21%

Explanation:

the opportunity cost of capital can be determined by calculating the weighted average cost of capital

WACC = [weight of equity x cost of equity[ + [weight of debt x cost of debt x (1 - tax rate)] + [weight of preferred stock x cost of preferred stock]

0.3 x 10.76 + (0.5 x 13.91) + (0.2 x 0.65 x 7,87)

3.228 + 6.955 + 1.231

11.21%

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Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares; Brad, land wo
eduard

Answer: d. Ron has income on the transaction of $21,000

Explanation:

Ron’s stock received for services counts toward the 80% control test so the transfers are eligible for IRC § 351 exemption.

This means that the total income that Ron has as a result of this transaction is the $21,000 for services.

Ron's basis will therefore be;

= Cattle basis + Income from services rendered

= 6,000 + 21,000

= $27,000

4 0
3 years ago
John, a product manager, ensures that his team has regular meetings and no team member is absent during the meetings. He also en
Brums [2.3K]

Answer:

Cohesiveness

Explanation:

By getting his team to work together and also attend meetings regularly, John is attempting to increase his team's cohesiveness.

This is because all of the activities that John is getting his team involved in is to ensure they work together and get used to each other, be comfortable around each other and understand each other. When all of these aforementioned are imbibed by the team members, the team would have a close bond which in turn will increase the efficiency and productivity of the team.

I hope this helps.

3 0
2 years ago
Hillside issues $2900000 of 9% 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. T
DaniilM [7]

Answer:

Dr. Cash                                                 $3,549,590

Cr. Premium on Account Receivable  $649,590

Cr. Bond Payable Account                   $2,900,000

Explanation:

The difference between the face value of the bond and the sale value of the bond is known as premium or the discount on the bond. If the face value is higher from the sale value the bond is issued on the discount and if the sale value of the bond is higher than the face value the bond is issued on the premium.

Premium on the Bond =  Face value - Sale value = $3,549,590 - $2,900,000  = $649,590

The Premium will be amortized during the life of the bond  to maturity and deducted from the interest expense.

3 0
3 years ago
Castelda company issues zero coupon bonds which mature in 30 years. These bonds can be bought for $999.38 and then pay no annual
professor190 [17]

Answer:

16.59%

Explanation:

We are given the present value of the bonds, their future value and the time, we need to calculate the rate:

FV = PV (1 + rate)ⁿ

  • FV = 100,000
  • PV = 999.38
  • n = 30

100,000 = 999.38 (1 + rate)³⁰

(1 + rate)³⁰ = 100,000 / 999.38 = 100.062

1 + rate = ³⁰√100.062 = 1.1659

rate = 1.1659 - 1 = 0.1659 or 16.59%

8 0
2 years ago
Montana company was authorized to issue 125,000 shares of common stock. the company had issued 54,000 shares of stock when it pu
ycow [4]
Do you have Any answer choices
4 0
3 years ago
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