Gi.rls jo.in to ha.ve fu.n eim-gywj-msb

Information on Lightning Power, Co., is shown below. Assume the company’s tax rate is 21 percent.

ss7ja [257]

Answer:

WACC(with preferred shares) 10.60145%

Explanation:

First, we derminate the cost of debt by solving for the rate at which the present value matches the 1,080 as which the bond is currently selling:

this could be done using a financial calculator or Excel:

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 62

time 50

rate 0.057126844

$62 \times \frac{1-(1+0.0571268435271283)^{-50} }{0.0571268435271283} = PV\\$

PV $1,017.8208

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 1,000.00

time 50.00

rate 0.057126844

$\frac{1000}{(1 + 0.0571268435271283)^{50} } = PV$

PV 62.18

PV c $1,017.8208

PV m $62.1792

Total $1,080.0000

Now, we calculate the debt:

16,000 bonds x 1,000 x 108% = 17,280,000

Now we move to equity:

We have to determinate the cost of capital using CAMP

$Ke= r_f + \beta (r_m-r_f)$

risk free 0.031

market rate 0.09

premium market (market rate - risk free) = 0.07

beta(non diversifiable risk) 1.2

$Ke= 0.031 + 1.2 (0.07)$

Ke 0.11500

Now we calcualte the equity

535,000 shares x 81 = 43,335,000

Last, preferred shares:

4.2%

and then

20,000 shares x $92 = 1,840,000

Now, we are able to sovle for WACC

$WACC = K_e(\frac{E}{E+P+D}) + K_p(\frac{P}{E+P+D}) + K_d(1-t)(\frac{D}{E+P+D})$

D 17,280,000

E 43,335,000

P 1,840,000

V 62,455,000

Ke 0.115

Equity weight 0.69

Kp 0.042

Preferred Weight 0.03

Kd 0.1143

Debt Weight 0.28

t 0.21

$WACC = 0.115(0.693859578896806) + 0.042(0.0294612120726923) + 0.1143(1-0.21)(0.276679209030502)$

WACC 10.60145%

4 0

3 years ago

PLZ HELP

Kitty [74]

Answer:

200

Explanation:

8 0

3 years ago

The failure of Lehman Brothers was due in large part to_____________.A. Understating allowance for loan losses B. Use of Repo 10

Wittaler [7]

Answer:

The correct answer is: B. Uso de transacciones del Repo 105.

Explanation:

The Lehman Brothers bankruptcy case describes one of the events that led to the most important bankruptcy in history.

The collapse of Lehman in September 2008 was the consequence of a fatal combination of intricate accounting rules, complex derivatives, greed, excessive leverage and the complacency of rating agencies. In addition, it was the trigger for a chain reaction in all financial institutions that suffered from panic and the frozen liquidity that followed later.

Lehman's equivalent of pre-paid transactions is Repo 105, a fascinating term that, from now on, will become the new example to deceive analysts and investors.

Through these transactions, Lehman Brothers was able to reduce leverage on the right side of the balance sheet and, at the same time, reduce assets (some of them undesirable) on the left side. Duplicate Repo 105 transactions between the end of 2006 and May 2008, were known within the company, exceeded the self-imposed limits by the firm and typically occurred at the end of each quarter, when financial information had to be released.

The fact is as simple as the Repo 105 program transformed a financial transaction into an asset disposal.

3 0

3 years ago

What are two factors that would influence the cost of premiums for a malpractice insurance policy?\?

USPshnik [31]

The answer is:

the dollar mount covered by the insurance policy

and the physicians specialty

As the dollar amount covered got higher, the cost of premiums would become more expensive. Physicians specialty also would influence cost of premium due to the cost of their services, For example, top tier medical professionals such as a heart surgeons would resulted in higher cost of premiums than an average pediatrician.

6 0

4 years ago

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 8.0 hours

Mars2501 [29]

Answer:

$2525 Favorable.

Explanation:

Labor Rate Variance is calculated as

Budgeted Labor Cost (10,100 hours * $15.5 per hour) = $156,550.

Actual Labor Cost is $154,025

Labor Rate Variance = ($156,550 - $154,025) $2525 Favorable.

The actual hours are multiplied by the budgeted rate per labor hour which gives the Budgeted labor cost which is then subtracted from the actual labor cost given in the question which provides with the variance of $2525 Favorable.

5 0

4 years ago

Gi.rls jo.in to ha.ve fu.n eim-gywj-msb​

Gi.rls jo.in to ha.ve fu.n eim-gywj-msb