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Anon25 [30]
3 years ago
7

Western Electric has 32,500 shares of common stock outstanding at a price per share of $80 and a rate of return of 12.95 percent

. The firm has 7,350 shares of 7.90 percent preferred stock outstanding at a price of $95.50 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $407,000 and currently sells for 111.5 percent of face. The yield to maturity on the debt is 8.11 percent. What is the firm's weighted average cost of capital if the tax rate is 40 percent
Business
1 answer:
Sergio039 [100]3 years ago
6 0

Answer:

c. 11.10%

Explanation:

Options are <em>"a. 10.29% b. 10.51% c. 11.10% d. 10.72% e. 11.49%"</em>

Market Value of Equity = $80 * 32,500

Market Value of Equity = $2,600,000

Market Value of Preferred Stock = $95.50 * 7350

Market Value of Preferred Stock = $701,925

Market Value of Debt = $407,000 * 1.115

Market Value of Debt = $453,805

Total Market Value = Market Value of Equity + Market Value of Preferred Stock + Market Value of Debt

Total Market Value = $2,600,000 + $701,925 + $453,805

Total Market Value = $3,755,730

kP = Annual Dividend / Current Market Price

kP = $7.90 / $95.50

kP = 0.082723

kP = 8.27%

WACC = [wD * kD * (1 - t)] + [wP * kP] + [wE * kE]

WACC = [(453,805/3,755,730) * 8.11% * (1 - 0.40)] + [(701,925/3,755,730) * 8.27%] + [(2,600,000/3,755,730) * 12.95%]

WACC = 0.59% + 1.55% + 8.96%

WACC = 11.10%

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Answer: Please see below for answer

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Journal to record employer provided fringe benefits for January

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Salaries expense(fringe benefits)$ 36,000

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6 0
3 years ago
ILL MARK YOU AS BRAINLIEST
kipiarov [429]

Answer: b

Explanation: i just did it on my test and got B

4 0
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The recording of business transactions is a basic part of financial reporting and is referred to as:.
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The recording of business transactions is a basic and fundamental component of financial reporting and is known as<u> bookkeeping.</u>

<h3>What is Bookkeeping?</h3>

Bookkeeping is the process of recording financial transactions.  It entails preparing reference papers for all company transactions, activities, and other occurrences.

The primary goal of bookkeeping is to maintain a comprehensive and precise record of all operations and transactions in a methodical, ordered, and logical way. This guarantees that the financial consequences of these activities are accounted for in the accounting books.

Learn more about Bookkeeping here:

brainly.com/question/25572872

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2 years ago
You are an economic advisor to the president. You observe a decrease in gross investment. Assume the economy was operating at th
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Answer:

a. Increase in Net Exports, Increase in AD, real GDP will stay same

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d. Actions smooth business cycle by brining actual real GDP towards full employment

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Aggregate Demand is the total value of goods & services all the sectors of an economy are planning to buy during a given period of time

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