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kykrilka [37]
3 years ago
6

ou were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equi

ty. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 10.50%, and the tax rate is 25%. The firm will not be issuing any new stock. What is Quigley's WACC
Business
1 answer:
lukranit [14]3 years ago
4 0

Answer:

8.08%

Explanation:

WACC = (E/V)*Re + (D/V)*Rd*(1-Tc)

Re = cost of equity, Rd = cost of debt, E = market value of the firm's equity, D = market value of the firm's debt, V = E + D, E/V = % of equity financing, D/V = % of debt financing, Tc = corporate tax rate

WACC = (10%*6%) + (55%*10.50%) + (35%*6.50%)*(1-25%)

WACC = (0.1*0.06) + (0.55*0.105) + (0.35*0.065*0.75)

WACC = 0.006 + 0.05775 + 0.0170625

WACC = 0.0808125

WACC = 8.08%

So therefore, Quigley's WACC is 8.08%.

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Bill Dukes has $100,000 invested in a 2-stock portfolio. $32,500 is invested in Stock X and the remainder is invested in Stock Y
pshichka [43]

Answer:

0.98

Explanation:

Computation for Bill Duke portfolio's beta

First step is to find the Investment in Y which is:

Investment in Y=100,000-35,000

=$65,000

Second step is to calculate for the Portfolio beta using this formula

Portfolio beta=Respective beta*Respective Investment weight

Portfolio beta =(35,000/100,000*1.5)+(65,000/100,000*0.7)

Portfolio beta=(0.35*1.5) +(0.65*0.7)

Portfolio beta =0.525 +0.455

Portfolio beta=0.98

Therefore the Portfolio Beta will be 0.98

7 0
3 years ago
Disequilibrium occurs when
Simora [160]

Answer:

. quantity supplied does not equal quantity demanded.

Explanation:

Disequilibrium is a situation where the market price is below or above the intersection point of the demand and supply curve. As a result, the market experiences a shortage or surplus of a product. Therefore, at disequilibrium, the quantity supplied does not match the quantity demanded.

Disequilibrium is the contrast of equilibrium. At equilibrium, supply matches demand, meaning there is no surplus or shortages in the market.  If the quantity supplied exceeds quantity demanded, then the market experiences a surplus. Shortage arises if the quantity demanded is more than the quantity supplied.

6 0
3 years ago
Read 2 more answers
Why did the framers of the u.s. constitution separate powers and provide for a system of checks and balances?
Scorpion4ik [409]

The framers of the US constitution separate powers and provide for a system of checks and balances in order to guard against a tyrannical government where one particular branch would have too much power.

<h3>What are the functions of the 3 branches of government.</h3>

Apart from the delegate duties that these three branches have in the government, the way that the framers created them was to ensure that they were able to check each other. They provided checks and balance for each other.

The executive had the power to call the other two to other and so also doe the judiciary and the legislative arm of the government so that the people would not experience a dictatorship.

Read more on the constitution framers here: brainly.com/question/1087677

#SPJ4

7 0
1 year ago
Plutonic Inc. had $400 million in taxable income for the current year. Plutonic also had a decrease in deferred tax assets of $5
andrew-mc [135]

Answer:

Deferred tax is increased by $130 million

Explanation:

We have given income = $400 million

Company is subject to a tax rate of 40 %

So tax rate = 40 %

So current Tax = $400×40%= $160 Million

Decrease in deferred tax assets of 50 million result in increase in tax expense

Hence total Tax Expense= $160+$50= $210 Million

But it is given that expense is only $80 million

So change in deferred tax is increases by = $210 - $80 = $130

So deferred tax is increases by $130 million

6 0
3 years ago
Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Ser
andrey2020 [161]

Answer:

Breach of Contract

Explanation:

If a contract was signed that promised a job/salary, then rescinding the job by the prospective employer is grounds for a "Breach of Contract" lawsuit.

6 0
3 years ago
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