1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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%

You might be interested in
Stella is currently spending all of her weekly income purchasing the two goods that she likes cookies and milk. She is currently
Ivan

Answer:

Stella should consume less of milk and more of cookies to maximize total utility.

Explanation:

The price of cookies is ​$9​, and the price of milk is ​$3.

Stella consumes 10 cookies and 5 cartons of milk.

The marginal utility of 10th cookie is 50 utils and the marginal utility of 5th carton of milk is 25 utils.

Her total utility will be maximized if the ratio of marginal utility and price will be equal for both cookies and milk.

Ratio for cookies

= \frac{MUx}{Px}

= \frac{50}{9}

= 5.55

Ratio for milk

= \frac{MUy}{Py}

= \frac{25}{3}

= 8.33

Since the ratio is higher for milk, it means that Stella should consume less of milk and more of cookies to maximize total utility.

8 0
2 years ago
Frank decides that a social media campaign is the best way for him to attract new business to Slice of Life Pizza. After Frank i
Softa [21]

Answer: identify your target audience

Explanation:

Since Frank has identified his strategies and goals, then the next step in the campaign will be to identify the target audience.

The target audience refers to the consumers that are likely to attract new business to Slice of Life Pizza. This is vital for Frank to be able to reach out to more customers and make profit.

3 0
3 years ago
How long is the Amazon Prime free trial?
kompoz [17]
It is at a 30day free trail
4 0
3 years ago
The grapevine is perceived by most employees as being more believable and reliable than formal communiqués issued by management.
pantera1 [17]

Answer: False

Explanation: Grapevine is an informal communication channel in the organisation in which the information flows  in all directions irrespective of the level of authority.

This is not considered to be a reliable channel as it does not make any authority or obligation to anyone and often leads to false rumors in the organisation. Whereas in the case of formal communiques one can make the authority of the sender of the message if the information lead to any false rumors and chaos.

Thus, the given statement is false.

4 0
3 years ago
Jordan is a manager at a technology firm. When the top management makes decisions, Jordan explains it to his subordinates and gi
ioda

Answer:

In the context of the different leader styles, Jordan uses the participating style

Explanation:

Participative leadership also known as Democratic Leadership Style is a method of leadership that involves all team members in terms of identifying important goals as well as developing strategies and procedures to achieve the goals.

7 0
3 years ago
Other questions:
  • Question 1 which of the follow will happen if you miss a monthly credit card payment?
    5·1 answer
  • The term back door, as it refers to computer crime, is _____________.
    12·1 answer
  • Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the e
    13·1 answer
  • Exercise 4-2A Allocating costs between divisions Beasley Services Company (BSC) has 50 employees, 28 of whom are assigned to Div
    14·1 answer
  • A company purchased a commercial dishwasher by paying cash of $4,900. The dishwasher's fair value on the date of the purchase wa
    11·1 answer
  • Timothy Company has invested $1,000,000 in a plant to make vending machines. The target operating income desired from the plant
    9·1 answer
  • Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as be
    9·1 answer
  • . In 2015, The Avengers: Age of Ultron generated about $191.2 million on its opening weekend. In 2007, Spider Man 3 generated $1
    8·1 answer
  • Lack of access to key distribution channels is considered weakness true or false​
    12·2 answers
  • How did the growth of cities and commerce along with new theories of government lead to changes in social structure that affecte
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!