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motikmotik
2 years ago
13

Anson Jackson Court Company (AJC) The Anson Jackson Court Company (AJC) currently has $200,000 market value (and book value) of

perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. AJC's current cost of equity is 8.8%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $60.00. Refer to the data for the Anson Jackson Court Company (AJC). The firm is considering moving to a capital structure that is comprised of 40% debt and 60% equity, based on market values. The new funds would be used to replace the old debt and to repurchase stock. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return on debt to rise to 7%, while the required rate of return on equity would rise to 9.5%. If this plan were carried out, what would be AJC's new WACC and total value
Business
1 answer:
ddd [48]2 years ago
5 0

Answer:

7.38%

Explanation:

Calculation to determine what would be AJC's new WACC and total value

Using this formula

WACC and total value=(Equity)(Required rate of return on equity)+(Debt)(1-Tax rate)(Required rate of return on debt)

Let plug in the formula

WACC and total value=(0.6)(0.095)+(0.4)(1-0.4)(0.07)

WACC and total value=0.057+0.0168

WACC and total value=0.0738*100

WACC and total value=7.38%

Therefore would be AJC's new WACC and total value is 7.38%

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roxy decides that she wants to set a financial goal of saving for an emergency fund. write about some of the ways roxy could mak
Yuki888 [10]

The SMART goals fore Roxy will be illustrated as:

Specific: Roxy wants to start saving for an emergency fund.

Measurable - Roxy simply needs to measure the amount of money that she is getting every month and how much she uses for necessities.

Achievable- Roxy should think deeply whether she can keep up with and if it is doable. Can she contiously put money into the fund every time she gets paid?

Realistic- Roxy's goal is what she could need in the future, she needs to think if this goal is something she needs for the future. Is this something that is realistic for her to do?

Timely - The goal should be timely. This is important for the accomplishment of the goal.

<h3>What is SMART?</h3>

The acronym S.M.A.R.T. provides guidelines for setting goals and objectives for better results in project management, employee performance management, and personal development, among other areas. George T. Doran first coined the phrase in the Management Review issue from November 1981.

In this case, the SMART goals for Today have been explained above.

Learn more about SMART on:

brainly.com/question/8986181

#SPJ1

Creating a Personal Budget

The amount of money used for basic personal expenses such as housing, food, transportation, and taxes is called the cost of living. The cost of living for a city indicates how expensive or inexpensive it is to live there. Explore the cost of living for a few different cities.

Roxy is planning to move to Fort Lauderdale, Florida, and work as a nurse. She has one dog and no children. She uses public transportation and plans to rent an apartment when she moves. The new company she’ll work for pays employees bimonthly, which means twice a month. In this activity, you’ll help Roxy make a budget.

Part A

Roxy decides that she wants to set a financial goal of saving for an emergency fund. Write about some of the ways Roxy could make her financial goal a SMART goal.

Remember, a smart goal adheres to the SMART acronym:

Specific

Measurable

Achievable

Realistic

Timely

3 0
2 years ago
You are attending college in the fall and you need to purchase a computer. You must finance the purchase because your parents wi
rodikova [14]

The correct answer is installment credit. The explanation is below.

Installment credit allows you to purchase an item and then pay for it in installments. The reason that this would be the best option for you is that you do not have the money now to make the purchase, but you are able to make smaller monthly payments in order to purchase a computer.

Installment credit is better than revolving credit for new borrowers. Revolving credit would allow you to charge additional purchases on your revolving credit account. The installment plan only finances one item, rather than like a credit card, which is how revolving credit works. You would not choose non-installment credit because this would require you to make this payment all at once in a short period of time. It would not allow you to spread the payments out over time.

3 0
3 years ago
The return on the market portfolio is currently​ 12%. Mobile Phone Corporation stockholders require a rate of return of​ 30% and
Triss [41]

Answer:

The risk free will be 3.82%

Explanation:

We post the CAPM formula and how given data

Ke= r_f + \beta (r_m-r_f)  

risk free             ?

market rate 0.12

premium market market rate - risk free ?

beta(non diversifiable risk) 3.2

Ke = 0.3

Now we post the know values and solve for risk free

0.3= risk-free + 3.2 (0.12 - riskfree)  

0.3 = risk-free + 3.2 \times 0.12 - 3.2riskfree

0.3 = 0.384 - 2.2riskfree

0.3-0.384 = -2.2riskfree

-0.084/-2.2= riskfree

risk free = 0.0381818181818182‬ = 3.82%

5 0
3 years ago
An advantage of the _____ costing method is that the cost of goods sold approximates its current cost.
Komok [63]

Answer:

weighted average

Explanation:

An advantage of the weighted average costing method is that the cost of goods sold approximates its current cost. This is mainly due to the fact that the cost of each unit is made equal to the same cost of all units that are currently available for sale during that extended period of business. Therefore approximating its total current cost.

8 0
3 years ago
Your client, Tom, asks you to prepare his financial statements. He is especially curious about his net worth. He asks you to exp
Vilka [71]

Answer: Balance sheet

Explanation: In simple words, balance sheet refers to the statement which is prepared by an entity at the end of the financial year for depicting its assets, liabilities and equity in hand at that particular point of time.

Balance sheet shows the net worth of an entity at the end of the year and can also be used to evaluate how much of the assets are funded with the capital and  for how much any liability has been taken over.

Thus, from the above we can conclude that the correct answer is balance sheet.

6 0
3 years ago
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