Answer:
a)
Cost of debt (after tax) = 5.4%
Cost of preferred stock () = 10.53%
Cost of common stock () = 16.18%
b)
WACC = 14%
c)
project 1 and project 2
Explanation:
Given that:
Debt rate () = 9% = 0.09
Tax rate (T) = 40% = 0.4
Dividend per share () = $6
Price per share () = $57
Common stock price ()= $39
Expected dividend () = $4.75
Growth rate (g) = 4% = 0.04
The target capital structure consists of 75% common stock (), 15% debt (), and 10% preferred stock ()
a)
Cost of debt (after tax) =`
Cost of debt (after tax) = 5.4%
Cost of preferred stock () = = 10.53%
= 10.53%
Cost of common stock () =
= 16.18%
b)
WACC = 14%
c) Only projects with expected returns that exceed WACC will be accepted. Therefore only project 1 and project 2 would be accepted
Answer:
A. $250,800
B. $150,000
Explanation:
a. Calculation for maximum price
First step is to find the Earnings per year amount using this formula
Earnings per year= ROI×Plant and equipment replacement value
Let plug in the formula
Earnings per year=198,000*19%
Earnings per year=37,620
Second step is to calculate for the maximum price using this formula
Maximum price=Earnings per year/ROI
Let plug in the formula
Maximum price=37,620/15%
Maximum price= 250,800
Therefore maximum price is $250,800
b. Based on the information given each of the asset that each individual acquired will be recorded at the market fair value amount while the amount of $150,000 will be recorded as Goodwill.
Using this formula to calculate Goodwill amount
Goodwill =Purchased amount- Fair value
Let plug in the formula
Goodwill=750,000-600,000
Goodwill=$150,000
Answer:
The answer is: FALSE
Explanation:
The US total workforce is not expected to decrease, not even because the baby boom generation may start to retire. The total labor force in the US was estimated to be 160 million people in January 2018. The total labor force has been steadily increasing since 1960 except during the great recession period between 2009 and 2011.