The following transactions have been journalized and posted to the proper accounts: 1. Mark Call invested $7,000 cash in his new
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Answer:
Task a:
The answer is $24,500.
Task b:
The answer is 17%
Explanation:
<h2>Task a:</h2><h3>What is the maximum amount of new capital that can be raised at the LOWEST component cost of EQUITY?</h3><h3>Solution:</h3>We already know the following:
Projected net income = $21,000
Payout ratio = 30%
Retention ratio = 70%
Debt share = 40%
Equity share = 60%
Maximum amount of capital to be raised at the lowest component cost of equity = Projected net income ×
= $21,000 ×
= $24,500
<h3>Answer:</h3>The maximum amount of new capital that can be raised at the lowest component of equity is $24,500.
<h2>Task b:</h2><h3>What is the component cost of equity by selling new common stock?</h3><h3>Solution:</h3>k(e) (component cost of external equity) = [Dividend (D0)(1 + growth) / stock price(1 - flotation cost)] + growth
Formula:
k(e) = + 0.05
Where
Do = $2.00
G = 0.05
P = $21/88
= ($2.00(1 + 0.05) / $21.88(1-.20)) + 0.05
= ($2.10/$21.88(1-.20)) + 0.05
= ($2.10/$21.88(0.80) + 0.05
= 0.17 or 17%
<h3>Answer: </h3>The component cost of equity by selling new common stock = 17%
Credit cards are the card which is given by banks to the customers for withdrawing some amount beyond the account balance. The card I's is increased by $1579.3 than card H.
<h3 /><h3>What is a credit card?</h3>A credit card refers to a payment mechanism that helps both consumer and commercial business proceedings, including purchases and cash advances.
Computation of credit card's balance:
<u>Amount of </u><u>Card H </u><u>after 3 years:</u>
Given,
Principal(P) = $1,186.44
Interest Rate(r) = 14.74%
Number of time period(n) = 3 years.
Applying the above values in the formula given in the question:
<u>Amount of</u><u> Card I </u><u>after 3 years:</u>
Principal(P) = $1,522
Interest Rate(r) = 12.05%
A number of the time periods (n):
Again, apply the above values in the formula given in the question:
Now we take the difference between both the credit cards, we have:
Therefore, card H's balance is decreased by $1579.3 than a card I.
Learn more about credit cards, refer to: