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Sati [7]
3 years ago
13

Given the following information: Percent of capital structure: Preferred stock 10 % Common equity (retained earnings) 40 Debt 50

Additional information: Corporate tax rate 34 % Dividend, preferred $ 7.00 Dividend, expected common $ 2.50 Price, preferred $ 104.00 Growth rate 8 % Bond yield 9 % Flotation cost, preferred $ 9.40 Price, common $ 76.00 Calculate the weighted average cost of capital for Digital Processing Inc.
Business
1 answer:
sasho [114]3 years ago
8 0

Answer: 8.23%

Explanation:

Firstly, we will calculate the cost of debt which will be:

= Yield (1-Tax rate)

= 9% × (1-0.34)

= 9% × 0.66

= 5.94%

Then, the Cmcost of preferred stock will be:

= 7/(104-9.40)

= 7/(94.6)

= 7.39%

We will also get the value of the cost of equity which will be:

= (Dividend expected common/Price common) + growth rate

= (2.50/76) + 8%

= 3.29% + 8%

= 11.29%

For Debt:

Cost after tax: 5.94

Weight = 50%

Weighted cost = 5.94 × 50% = 2.97

For Preferred stock:

Cost after tax: 7.39

Weight = 1%

Weighted cost = 7.39 × 10% = 0.74

For Common equity

Cost after tax: 11.29

Weight = 40%

Weighted cost = 11.29 × 40% = 4.52

Weighted average cost of capital = 2.97 + 0.74 + 4.52 = 8.23%

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Arisa [49]

Answer: $3,580.30 (converted to 2decimal places).

Antwone need to deposit " $3,580.30008” into the account each semi-annual period in order to take his vacation in 2 years

Explanation:

By using compound interest formula below to solve the question

A = p ( 1 + r/n)^nt

A = amount (future value)= $3,800

P = principal (present value) ?

r = annual nominal rate = 3%= 0.03

n = today number of compounding years = semiannually (2 interest payments period in a year) = 2

t = time in years =2

3,800 = p ( 1 + 0.03/2)^2(2)

3,800 = p ( 1 + 0.015 )^4

3,800 = p ( 1.015 ) ^4

3,800 = 1.06136355 p

divide both sides by 1.06136355

p = 3,800 / 1.06136355

p = $3,580.30008

≈$3,580.30 ( rounded off to 2d.p)

3 0
3 years ago
On July 1, 20X4, Pillow Corp. obtained significant influence over Sleep Co. through the purchase of 3,000 shares of Sleep's 10,0
puteri [66]

Answer: $18,000

Explanation:

Income from investment is the percentage of the acquired company's income that the company that acquired it will report as their own based on their percentage of ownership.

By purchasing 3,000 shares out of 10,000, Pillow Corp owns;

= 3,000 / 10,000

= 30% of Sleep Co.

These shares were bough on July 1 so the relevant period will be half a year.

At the end of the year, Pillow Corp will report 30% of half of Sleep Co. income as income from investment for the year.

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= $18,000

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3 years ago
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Dominik [7]

true the first step is locating job leads


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The customer service department at JNC, Inc. has been receiving phone calls from customers for whom there is no record. This is
kozerog [31]

Answer:

The correct answer is (C)

Explanation:

Recording sales is one of the essential processes to make sure the transparency within the company. It helps to cross-check sales whenever a company wants to. Overall, in the above scenario,  the customer service department has received calls from the customers but there is no record which shows that there are unrecorded sales which itself is a big red flag.

8 0
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