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
tensa zangetsu [6.8K]
2 years ago
15

Brown Street Grocers has a cost of equity of 11.8 percent, a pre-tax cost of debt of 6.9 percent, and a tax rate of 35 percent.

What is the firm's weighted average cost of capital if the debt-equity ratio is 0.6? a. 11.80 percent b. 2.08 percent c. 9.70 percent d. 8.44 percent e. 9.06 percent
Business
1 answer:
motikmotik2 years ago
5 0

Answer:

The correct answer to the following question is option E) 9.06% .

Explanation:

Here the cost of equity given is  - 11.8%

Pre tax cost of debt- 6.9%

Tax rate- 35%

So the after tax cost of debt - 6.9% x 65%

= 4.485%

The debt to equity ratio - .6

So the weight of debt - .6 / ( 1 + .06 )

= .375

Weight of equity - 1 / ( 1 + .06 )

= .625

Weighted average cost of capital =

Debts cost x weight of debt + Equity cost x weight of equity

= 4.485 x .375 + 11.8 x .625

= 1.681875 + 7.735

= 9.06%

You might be interested in
Calculate the required rate of return for an asset that has a beta of 1.73​, given a​ risk-free rate of 5.3​% and a market retur
Mumz [18]

Answer:

 

(a)    13,3%

(b) 18,1%

Explanation:

To calculate the required rate of return for an assets it's necessary to use the CAPM (Capital Asset Pricing Model) model which considers these variables to estimate the required return of an assets, the model states the next:

ER = Rf  +   Bix( ERm - Rf )  

ER : Expected Return of Investment    

Rf : Risk-Free Rate    

Bi : Beta of the Investment    

ERm : Expected Return of the Market    

(Erm-Rf) :    Market Risk Premium    

It tries to explain the relationship between the systematic risk ((Erm-Rf  Market Risk Premium) of the market and the expected returns for assets.

5 0
2 years ago
Josh purchased 100 shares of XOM for $76.63 per share at the beginning of 2007. He received dividends per share of $1.37 (2007),
never [62]

Answer:

The IRR is 4.08%

Explanation:

In calculating the internal rate of return in excel,the cash outflow of $76.63 is shown in year 0 with a negative sign to indicate that it is the initial investment on the share, followed by dividends in received in later years shown as positive figures ,however in the fifth the dividend received and the cash received from disposing of the share were added together to show total cash inflow in the last year.

The computation of IRR is shown below

IRR for the share purchase  

 

Years Cash flow

0 -76.63

1 1.37

2 1.55

3 1.66

4 1.74

5 86.61  

IRR 4.08%

Find attached for detailed computation.

Download xlsx
4 0
3 years ago
If you draw a card with a value of three or less from a standard deck of cards, I will pay you $146. If not, you pay me $24. (Ac
Rainbow [258]

Answer: Expected value = $2.034

Explanation:

Total outcome = 52

Favorable Outcome = 8

Probability of drawing a card with a value of three or less = \frac{Favorable\ outcome}{Total\ outcome}

= \frac{8}{52}

=  \frac{2}{13}

Probability of drawing a card with a value of more than three = 1 -  \frac{2}{13}

=  \frac{11}{13}

Hence,

Expected value = 146 \times \frac{2}{13} + (-24) \times \frac{11}{13}

= 22.338 - 20.304

= $2.034

7 0
2 years ago
By linking a Google My Business account with a Google Ads account, you're able to create location extensions. Which information
AleksandrR [38]

Answer:

They display:

  • phone number
  • business address;
  • a map marker along with the business owner's ad text.

Explanation:

Location extensions give the opportunity a business owners to display the following:

  • phone number
  • business address;
  • a map marker along with the business owner's ad text.

Location extensions are of two types:

1. Google Ads location extensions also give the opportunity to display phone number, business address; and a map marker along with the business owner's ad text.

2. Affiliate location extensions make it easy to discover a retail chains outlet that is nearby selling what you want to buy. The purpose is to serve the owners of retail chains outlets who want customers who are making decisions on what and where to buy commodities to find their outlets.

3 0
3 years ago
The mission of the Securities and Exchange Commission (SEC) is to: a. PROTECT SHAREHOLDERS' RIGHTS BY MAKING SURE THAT STOCK MAR
lilavasa [31]

Answer:

b. PROTECT SHAREHOLDERS' RIGHTS BY MAKING SURE THAT STOCK MARKETS ARE RUN FAIRLY

Explanation:

  • The U.S (SEC) securities and exchange commission is an independent agency of the American government and is responsible for enforcing the federal security laws and rules and regulated the industry.
  • The SEC was created by the securities exchange act of 1934, mission as to protect the investors, maintain fair and orderly, and have an efficient market.  
  • <u>Publishes quarterly and semi quarterly reports form the companies that are crucial for investors to make a sound decision when investing in the capital markets.</u>
8 0
3 years ago
Other questions:
  • 18. Callon Industries has projected sales of 67,000 machines for 2012. The estimated January 1, 2012, inventory is 6,000 units,
    12·1 answer
  • The wholesale cost box of 25 pieces of chocolate is 50 AEDYou decide to sel each bar of chocolate with a 20% profit plus 5% VAT
    7·1 answer
  • What potential challenges will you have supporting your argument with this demographic?
    5·1 answer
  • Which of the following is a reason the government can't completely control the business cycle?
    10·2 answers
  • A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. Management predicts this machine
    13·1 answer
  • Many economists believe that the market for wheat in the United States is an almost perfectly competitive market. If one firm di
    13·1 answer
  • The following is a report from a not-very-efficient BLS survey taker: "There were 105 people in the houses I visited. 26 of them
    7·1 answer
  • There are two routes for driving from A to B. One is freeway, and the other consists of local roads. The benefit of using the fr
    7·1 answer
  • Miriam if you found this comment
    13·1 answer
  • What is an essential feature of a market economy?
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!