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Answer:
total amount that owes the bank at the end of the loan is $22897.74
Explanation:
given data
loan = $22,000
Annual rate = 8% = = 0.021192 %
time = 6 month = 183 days
solution
we get here Amount at the end of loan tenure
Amount at the end of loan tenure = Amount borrowed × FVf at 0.02192%
Amount at the end of loan tenure = $22,000 × 1.040886
Amount at the end of loan tenure = $22897.74
so total amount that owes the bank at the end of the loan is $22897.74
Answer:
a) 9.00 %
b) 7.80 %
c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough
d) 9.00 %
e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs
Explanation:
a)
Ke 0.12
Equity weight 0.5
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight = 0.5
WACC 9.00000%
c)
Ke 0.12
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 7.80000%
d)
<em>Ke 0.16</em>
Equity weight 0.3
Kd(1-t) = after tax cost of debt = 0.06
Debt Weight 0.7
WACC 9.00000%