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lora16 [44]
3 years ago
5

GenX has a target capital structure of 40 percent common stock, 5 percent preferred stock, and 55 percent debt. Its cost of equi

ty is 22 percent, the cost of preferred stock is 8.5 percent, and the pre-tax cost of debt is 8 percent. What is the firm's WACC given a tax rate of 35 percent
Business
1 answer:
AVprozaik [17]3 years ago
6 0

Answer:

12.085 %

Explanation:

WACC = Cost of Equity x Weight of Equity + Cost of Preference Stock x Weight of Preference Stock + Cost of Debt x Weight of Debt

Remember to use the after tax cost of debt :

after tax cost of debt = interest x ( 1 - tax rate)

                                   = 8.00 % x (1 - 0.35)

                                   = 5.20 %

therefore,

WACC = 22.00 % x 0.40 + 8.50 % x 0.05 + 5.20 % x 0.55

           = 12.085 %

thus

the firm's WACC given a tax rate of 35 percent is 12.085 %

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How does funding from national savings differ from funding obtained from capital inflows? National savings are repaid domestical
jolli1 [7]

Answer:

National savings are repaid domestically, whereas capital inflows are repaid to a foreigner.

Explanation:

National savings refer to the portion of the income that is not consumed, or  spent by government. It is the combined or aggregate value of all private savings and the budget balance. Therefore, national savings are repaid domestically when borrowed.

Capital inflow refers to the net amount of funds that is moved into a particular benefiting company from another country. It is usually in form of investments by foreigners and it is meant to be paid back to them.

6 0
3 years ago
Stewart wants to invest some money that he just inherited. He found that his bank offers a savings account paying a guaranteed 3
Likurg_2 [28]

Answer:

Stewart will probably have to accept a higher level of risk .

Explanation:

Hence, a large-risk investment is one in which the risks of failure, or of losing some or all of the asset, are greater than the average.

  • These opportunities often offer investors the ability for greater returns in exchange for embracing the degree of risk associated with that.
  • In saving account he gets 3% rate of return but also gets a lower rate of risk and does not earn much.

If he invests his money in higher-risk fields like shares, he may get a higher profit.

3 0
3 years ago
In a production process new raw materials are considered_____ whereas the finished products are considered______
loris [4]

Answer:

In a production process new raw materials are considered_____ whereas the finished products are considered______

WIP (Work IN Process)

Units for Sale/ Raw Material for other Processes

Explanation:

WIP (Work IN Process)

The raw material in WIP is converted to useful material for other processes.

Work in process consists of materials labor factory overhead or collectively called as conversion costs. In Work in Process these are completed fully or to a certain limit and send to other processes for further work.

Units For sale

Finished goods are ready for sale and send to desired stores or ware houses for storage and further dispatching to retail stores.

Sometimes these units further need servicing or processes in other departments to make a complex unit . In these situations they are considered raw material for other processes.

3 0
3 years ago
Whenever Congress has a perceived need for ongoing control of an economic activity, it has tended to create a a. regulatory agen
RUDIKE [14]

Whenever Congress has a perceived need for ongoing control of economic activity, it has tended to create a cabinet department.

The Vice President and the secretaries of agriculture, commerce, defense, education, energy, health and human services, homeland security, housing and urban development, interior, labor, state, transportation, and veterans affairs make up the cabinet. Cabinets come in three varieties: inset, full overlay, and partial overlay. Each phrase refers to the way a cabinet door or drawer rests against or inside a cabinet frame. The three varieties of cabinets also stand for various price ranges and fashion trends. Such a division is frequently referred to as the Prime Minister's Office. Various other nations have cabinet offices.

The Prime Minister's Office is a division of the Cabinet Office in the United Kingdom; a similar division exists in Australia and New Zealand.

Learn more about Congress here: brainly.com/question/491441

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7 0
1 year ago
If an agent injures a third party during the course of employment, to what extent should the employer be held liable? Under what
postnew [5]

Answer:

The employer will be held liable.

Explanation:

If the external agent brings harm or injury to a third party in the course of an employment, the employer is held liable. When a principal directs an agent to commit for a tort or if the principal is aware of the consequences of carrying the instructions of the agent could cause harm or injure the person, then the principal is liable.

It is called direct liability.

The liability for the intentional tort which is imputed to the principal when the agent acts to further the business of the principal.

The agent is personally liable under the following circumstances :

  •   Foreign principal
  • Agent signs the contract in his own name
  • Non-existent principal
  •  Principal cannot be sued:
  • Undisclosed principal

Example :

A credit card company hires a sales person and offers a company van to make sales in that area. The sales person uses the office van to official purposes. But one night, he drove the car to a friend's party and while coming he drove over a pedestrian. In this case, the owner of the company will not be held liable as the sales person uses the company van for his personal use while going out for party with his friends. While causing the accident, the sales person was not not using the office van for official purposes and was not tendering official duties at that time.

3 0
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