Answer:
a.Year Cashflow [email protected]% PV [email protected]% PV
$ $ $
0 (1,000) 1 (1,000) 1 (1,000)
1-15 72 11.1184 800 7.6061 548
15 1,000 0.5553 555.3 0.2394 239
NPV 355.3 NPV 213
Kd = LR + NPV1/NPV1 + NPV2 x (HR – LR)
Kd = 4 + 355.3/355.3 + 218 x (10 – 4)
Kd = 4 + 355.3/573.3 x 6
Kd = 7.72%
b. Kp = D/Po
Kp = $100/$1,111
Kp = 0.09 = 9%
c. Ke = D1/Po (1 – FC) + g
Ke = $4.3995/$50(1-0.15) + 0.05
Ke = $4.3995/$42.50 + 0.05
Ke = 0.1535 = 15.35%
WACC = Wdrd(1 – T) + Wprp + Were
WACC = 0.3(7.72)(1-0.4) + 0.1(9) + 0.6(15.35)
WACC = 1.39 + 0.9 + 9.15
WACC = 11.44%
Explanation:
In this case, we need to calculate cost of debt, cost of preference shares and cost of equity. Cost of debt is calculated based on internal rate of return. Cost of preferred stock is the ratio of dividend paid to the market price. Cost of equity is a function of D1 divided by current market price after floatation cost plus growth rate. WACC is equal to cost of each source multiplied by respective weights.
Answer:
implied contract.
Explanation:
Based on the information provided within the question it can be said that this is an illustration of an implied contract. This is a type of contract that is implied based on the actions of those involved. Even though this type of contract is usually not spoken or written it is still completely legal and enforceable. Such as the customers asking for the newspapers to be delivered , knowing that they will have to pay for it sooner or later.