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Phantasy [73]
3 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]3 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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3 years ago
To encourage employee ownership of the company's common shares, KL Corp. permits any of its employees to buy shares directly fro
Norma-Jean [14]

Answer:

$22,500

Explanation:

KL Corp

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3 0
3 years ago
The price of wheatwould be â$nothingper bushelif there was no price support. In order to maintain the priceâ support, the govern
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Answer:

$5, 200 bushels of wheat

Explanation:

From the diagram the price support was at $6 per bushel, however if the government removes the price support or if there was no price support, then the price of the wheat will be $5 for a bushel. And in order to maintain the price support, from the diagram below, it is expected that the government would have to purchase 200 bushels of wheat.

4 0
3 years ago
Randy is an accountant at XYZ Store Co. In January the store had $150,000 in sales, $35,000 in payroll, $20,000 in rent and util
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February = 175,000 - 39,000 - 25,000 - 45,000 = 66,000 net cash flow

For the change you divide (February/January) -1 or (66,000/75,000)-1= -.12

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5 0
3 years ago
What is the most common workplace for people in the Finance cluster?
Oxana [17]

Answer:

An office

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an office  is the best option on this list.

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2 years ago
Read 2 more answers
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