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Phantasy [73]
2 years ago
14

Alabaster Incorporated wants to be levered at a debt to value ratio of .6 . The cost of debt is 9%. the tax rate is 35% and the

cost of equity for an all equity firm is 12%. What will be Alabaster's cost of equity? ( Please show all work and show the answer as a percentage)
Business
1 answer:
Aleks [24]2 years ago
4 0

Answer:

14.925%

Explanation:

Cost of equity = Unlevered Cost of Equity + (Unlevered Cost of Equity - Cost of debt)*Debt to value ratio / (1-debt to value ratio)*(1-Tax rate)

Cost of equity = 12% + (12%-9%)*0.6/(1 - 0.6)*(1 - 35%)

Cost of equity = 0.12 + 0.018/0.4*0.65

Cost of equity = 0.12 + 0.02925

Cost of equity = 0.14925

Cost of equity = 14.925%

So, Alabaster's cost of equity will be 14.925%.

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Firms engage in __________ when their intimate knowledge and expertise in one market allows them to offer customized marketing p
blagie [28]

Answer:

The correct answer is letter "C": market specialization.

Explanation:

After <em>segmenting </em>their market, companies tend to start their phase of market specialization with the information gathered in their research which is helpful to spot what the company's best segment of the market is based on <em>age, gender, </em>and <em>consumer income</em>. With that information, firms can drive their efforts toward producing a good or rendering a service that satisfies the needs of a specific group of them.

3 0
3 years ago
When countries such as the U.S. promote production of domestic​ cotton, developing countries that produce cotton are hurt.​ Why?
uysha [10]

Answer:

Explanation:

They are hurt because cotton is one of their exports and a developing nations needs to be able to make money from them so if a big country takes away one of their main exports it will hurt their economy.

5 0
2 years ago
You have taken out a $225,000, 3/1 ARM. The initial rate of 5.8% (annual) is locked in for three years and is expected to increa
RoseWind [281]

Answer:

$1,320.19

Explanation:

Loan amount = $225,000

Rate = 5.80%

Years = 30

PMT = ?

Initial payment = PMT(Rate/12, Years*12, -225,000)

Initial payment = PMT(5.80%/12, 360, -225,000)

Initial payment = 1320.185230439806

Initial payment = $1,320.19

Therefore, the initial payment on the loan is $1,320.19

8 0
2 years ago
If a company receives $12,000 from the stockholders to establish a corporation, the effect on the accounting equation would be:_
Darina [25.2K]

Answer:

The correct answer is option A

Explanation:

A receipt of cash indicates an increase in cash which is an asset. When an asset increases, it is represented by a debit to that asset's account and the asset side of the accounting equation is also debited. Thus, a receipt of $12000 cash from stockholders will be represented by a debit or an increase to the asset account for $12000.

The other side of the transaction would be a credit to the equity for $12000 because the stockholders are the owners of the company and any capital invested by the owners in the company is represented by a credit to the equity account as the capital is credited when it increases. Thus, the effect on accounting equation will be an increase in the equity of $12000.

4 0
2 years ago
Mattel Inc.'s2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,02
Sophie [7]

Answer:

A. 22.4%

Explanation:

Income TAXES

Operating profit before interest and tax  $ 519.233  

Net nonoperating expense before tax -$ 109.491  

Subtotal $ 409.742  

Provision for income taxes -$ 91.720 -22,4%

Net Income $ 318.022  

3 0
3 years ago
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