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sasho [114]
2 years ago
14

The calculation of WACC involves calculating the weighted average of the required rates of return on debt, preferred stock, and

common equity, where the weights equal the percentage of each type of financing in the firm’s overall capital structure. is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) equation. Mitchell Co. has $2.3 million of debt, $2.5 million of preferred stock, and $1.8 million of common equity. What would be its weight on preferred stock?
Business
1 answer:
FinnZ [79.3K]2 years ago
8 0

Answer:

37.88 %

Explanation:

The weight on preferred stock mean, what percentage out of the Total Market Value of the Sources of Capital pooled together is taken by Preferred Stock.

Weight on preferred stock = Market Value of Preferred Stock / Total Market Value of Sources of Capital x 100

where,

Market Value of Preferred Stock = $2.5 million

and

Total Market Value of Sources of Capital :

Debt                            $2.3 million

Preferred Stock         $2.5 million

Common Equity          $1.8 million

Total                            $6.6 million

therefore,

Weight on preferred stock = $2.5 million / $6.6 million x 100 = 37.88 %

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Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming yea
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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

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variable cost ratio= Variable cost/ selling price

variable cost ratio=  21/60= 0.35

2) We need to use the following formula:

Contribution margin ratio= (selling price - unitary variable cost) / selling price

Contribution margin ratio= (60 - 21) / 60= 0.65

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3 years ago
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Rudik [331]

Answer:

a) Consolidated  Net Income

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b) JOURNAL ENTRIES

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Explanation:

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2 . Consolidate the financial statements

b) we credit investment and if investment is greater than the total of common stock and retained earnings at 80%  then we create equity represented by goodwill ( asset ) , if investment is less the we set off that amount in the retained earnings of the investing company. (Assuming investment = 80 % of total amount at acquisition .

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Alexxandr [17]

Answer:

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