Based on the information given, it can be deduced that Trade Winds Corp. has a closed shop arrangement.
A closed shop arrangement simply means a place of work where all the employees gave to belong to an agreed trade union.
Under this condition, an employer will only employ the people that are to be part of the trade union. Therefore, it can be seen that Trade Winds Corp. has a closed shop arrangement.
Learn more about trade union on:
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Answer:
-0.4242
Explanation:
Ra = 0.21 or 21%
Rf = 0.045 or 4.5%
Rp = 0.28 or 28%
Expected return on a portfolio is weighted average return of its assets
:
Rp = Rf*(1-w) + Ra*w
28 = 4.5*(1-w) + 21*w
28 = 4.5 - 4.5w + 21w
28 - 4.5 = 21w - 4.5w
21w - 4.5w = 28 - 4.5
16.5w = 23.5
w = 23.5/16.5
w = 1.4242
Hence, weight of risky asset = 1.4242
So, Weight of risk free asset = 1 - 1.4242
Weight of risk free asset = -0.4242
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Answer:
A. 12.1%
B. 8.9%
Explanation:
a. Calculation for What is the company's new cost of equity
Using this formula
New cost of equity=Cost of capital+[(Cost of capital- Debt interest rate ) *(Debt-equity ratio)*(1)]
Let plug in the formula
New cost of equity=[0.089+[(0.089-0.057)*(1)*1]
New cost of equity=[0.089+0.032*(1)*1]
New cost of equity=[0.121*(1)*1]
New cost of equity=0.121*100
New cost of equity=12.1%
Therefore the company's new cost of equity will be 12.1%
b. Calculation for What is its new WACC
Particular Weight Cost Weighted cost
Equity 0.5000 *12.1% = 0.0605
Debt 0.5000 * 5.7% =0.0285
WACC =0.089*100
WACC =8.9%
(0.0605+0.0285)
Therefore the new WACC will be 8.9%
Answer:
I'm pretty sure its 2346
Explanation:
might be wrong considering Edge loves to move answers around. <em>yes they do that....</em>
