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bearhunter [10]
3 years ago
10

Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to maturity

on the company's outstanding bonds is 9%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 10.90%. What is Pearson's cost of common equity
Business
1 answer:
Bingel [31]3 years ago
5 0

Answer:

13.86%

Explanation:

WACC = cost of equity x percentage of equity + (cost of debt x percentage of debt x ( 1 - tax rate))

0.65 x e + (9 x 0.6 x 0.35) = 10.90

cost of equity = 13.86%

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The Wall Street Journal reports that the rate on four-year Treasury securities is 2.2 percent and the rate on five-year Treasury
Marina CMI [18]

Answer:

option:D

Explanation:

3 0
3 years ago
Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of wh
docker41 [41]

Answer:

A. 19,800

B. Check answer

Explanation:

In this question, we are asked to calculate or find out two things

Tax payable on $450,000 if they does not incorporate the sole proprietorship and file joint is 108,879.

If they incorporate sole proprietorship and shift $250,000 to it, on balance $200,000 taxable income they pay $36,579 on their individual return and on $250,000 business income at 21% tax payable is $52,500. Thus, total tax payable is $89,079.

By shifting $250,000 income to corporate, they are saving $19,800 in taxes.

b

Their marginal tax rate is 22% once their income crosses $77,400. It is beneficial if they keep $77,400 taxable in their hands and the balance $372,600 in the hands of the corporate at 21%.

3 0
3 years ago
sadiya, who owns a dance studio, consistently reminds her employees that dance lessons are a luxury for customers, so they shoul
Kitty [74]

When Sadiya makes statements to her employees about the characteristics of dance classes, which should be informative and fun, she is explicitly stating values ​​and norms preferred by her organization.

As the owner of the dance studio, she manages and coordinates her collaborators for the institution of organizational culture focused on the studio's vision, mission and values.

An organization focused on offering a differentiated and quality service to the customer will increase its value, positioning and competitiveness.

Therefore, through her services, Sadiya aims to generate value to her customers through informative and fun dance classes, increasing the loyalty and success of her business.

Learn more here:

brainly.com/question/10770331

5 0
3 years ago
Which of the following is an example of a qualitative materiality factor? The client installed a new security system to protect
ycow [4]

Answer:

A. The client installed a new security system to protect the building

Explanation:

The client is experiencing slow down in sales is an example of qualitative materiality factor as it can lead to misstatement. Sales turnover and payment, Percentage (%) of expenses to income and Percentage (%) of inventory to assets are all example of quantitative materiality factor. Whereas installation of new security system is not material which could lead to misstatement.

3 0
3 years ago
Suppose the going price for a bag of popcorn at the movies is $2. If Joe's marginal cost of producing that bag of popcorn is $2,
marin [14]

Answer:

27 because popcorn at the movies too expensive

Explanation:

8 0
2 years ago
Read 2 more answers
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