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olasank [31]
2 years ago
15

16) The Nantucket Nugget is unlevered and is valued at $640,000. Nantucket is currently deciding whether including debt in its c

apital structure would increase its value. The current of cost of equity is 12%. Under consideration is issuing $300,000 in new debt with an 8% interest rate and maintaining this dollar amount of debt in the long run. Nantucket would repurchase $300,000 of stock with the proceeds of the debt issue. There are currently 32,000 shares outstanding and its effective marginal tax bracket is 34%. What will Nantucket's new WACC be? (5 pts)
Business
1 answer:
Simora [160]2 years ago
6 0

Answer:

10.34%

Explanation:

Calculation to determine what will Nantucket's new WACC be

New Firm Value= $640,000 + (.34) ($300,000)

New Firm Value= $742,000

Capital Structure = $300,000 + $442,000

($742,000-$300,000=$442,000)

rs = .12 + (300/442) * (.12 - .08) * (1 - .34)

rs= .12 + .0179

rs = .1379*100

rs = 13.79%

Now let calculate the New WACC

New WACC = (300/742) * (.08) * (1 - .34) + (442/742) * (.1379)

New WACC= .0213 + .0821

New WACC= .1034*100

New WACC= 10.34%

Therefore what will Nantucket's new WACC be is 10.34%

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Lements of financial statements do not include:_________
lukranit [14]

Lements of financial statements do not include monetary unit.

A monetary unit of currency, such as the US dollar or the Mexican peso. All transactions are measured in currency units and represented in book currency units. This is the currency unit commonly used in the country. For example, in the United States, all accounting records are kept in US dollars.

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Learn more about monetary unit here: brainly.com/question/24373500

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3 0
1 year ago
During 2019, $27,000 of cash dividends were declared and paid. A patent valued at $80,000 was obtained in exchange for land. Equ
nadezda [96]

Answer:

a. Change in Cash that occurred during 2019:

Cash outflow $27,000

Cash inflow = $13,000

Net outflow = $14,000

b. Statement of Cash Flows for the year ended December 31, 2019:

Investing activities:

Sale of Equipment         $13,000

Financing activities:

Payment of dividends ($27,000)

Net cash outflow =        $14,000

Explanation:

a) Data and Calculations:

Cash dividends paid during 2019 = $27,000

Patent purchased = $80,000

Land sold in exchange of patent = $80,000

Sale of equipment = $13,000

Sales of Bonds Payable = Cost of Building Improvements

7 0
3 years ago
Kellogg's sells many different breakfast cereals, including Corn Flakes, Rice Krispies, Frosted Flakes, Raisin Bran, and Special
11Alexandr11 [23.1K]

Answer:

The answer is false

Explanation:

Breadth, refers to the number of product lines  offered by a firm

6 0
3 years ago
Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1
Setler [38]

Answer:

Cost of goods sold as per average cost method = $92,458.5

Explanation:

As for the information provided as follows:

Opening Inventory             265 units     @         $153 each      = $40,545

Purchase                             465 units     @         $173 each      = $80,445

Purchase                             165  units     @         $213 each      = $35,145

Total data                            895 units                                        = $156,135

Average cost per unit = $156,135/895 = $174.45

In average cost method simple average is performed, whereas in weighted average weights are assigned.

Sale is of 530 units

Cost of goods sold as per average cost method = $174.45 \times 530 = $92,458.5  

7 0
2 years ago
Process tailoring is best undertaken on agile projects when
Mkey [24]
It's best to use process tailoring when they are facing difficulties with the current agile projects strategy or they want to create improvement by trying new things.
Through process tailoring, management could adjust current strategy with unique problems/situation that faced by the organization in order to increase the efficiency.
5 0
3 years ago
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