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Grace [21]
4 years ago
12

Analysts estimate the cost of debt capital for Abbott Laboratories (NYSE: ABT) is 3.0% and that its cost of equity capital is 5.

0%. Assume that ABT's statutory tax rate is 37%, the risk-free rate is 2.5%, the market risk premium is 5.0%, the ABT market price is $65.60 per common share, and its dividends are $0.88 per common share. (a) Compute ABT's average pretax borrowing rate and its market beta. (Round your answers to one decimal place.) Average borrowing rate = Answer 1.3 % Market beta =
Business
1 answer:
hichkok12 [17]4 years ago
5 0

Answer:

4.76% and 0.5

Explanation:

The computation is shown below:

Average borrowing rate is

= Cost of debt capital ÷ (1 - tax rate)

= 3% ÷ (1 - 0.37)

= 4.76%

And, the market beta is

Cost of equity = Risk free rate of return + Beta × (Market risk premium - risk free rate of return)

5% = 2.5% + Beta × 5%

So, the beta is 0.5

The (Market risk premium - risk free rate of return) is also known as market risk premium

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many credit card companies will let you determine your interest rate when they approve for your card true or false
SashulF [63]

The answer to this is false because all they want is for you to use their card and then it will hurt you credit score because then you will have to pay interest rates.

So it is false

6 0
4 years ago
Read 2 more answers
Suppose you believe that Delva Corporation's stock price is going to decline from its current level of $82.50 sometime during th
Yakvenalex [24]

Answer:

B. $1,989.75

Explanation:

Cost of option (C) = $510.25

Option selling price (Po) = $85 per share

Share price when selling (Ps) = $60 per share

Number of shares (n) = 100 shares

Since the option allows you to sell shares that are valued at $60 for at $85 each, by selling 100 shares, your total earnings are:

E=(P_o-P_s)*n\\E=(\$85-\$60*)100\\E=\$2,500

To find the pre-tax net profit (P), subtract the amount paid for the options from your earnings:

P=E-C= \$2,500-\$510.25\\P=\$1,989.75

6 0
4 years ago
Nebraska Inc. issues 4,100 shares of common stock for $131,200. The stock has a stated value of $15 per share. The journal entry
julsineya [31]

Answer:

$61,500

Explanation:

Based on the information given if the company

issues 4,100 shares of common stock for the amount of $131,200 in which the stock has a stated value of $15 per share which means that The journal entry to record the stock issuance would include a credit to Common Stock for $61,500 Calculated as:

Credit to Common Stock=4,100 shares*$15 per share

Credit to Common Stock=$61,500

5 0
3 years ago
Brief Exercise 9-17 Record early retirement of bonds issued at a premium (LO9-7)
butalik [34]

Answer:

Dr Bonds payable                       $50,700

Dr premium on bonds payable     $4,265

Cr Cash                                                                                 $53,000

Cr gain on bonds retirement($50,700+$4,265-$53000) $1,965

Explanation:

The premium yet to be amortized on the bond at retirement is the carrying  value minus face value i.e  $54,965-$50,700=$4265

The premium  on bonds payable would now be debited with $4265

The cash paid on retirement would be credited to cash account

The face value of the bonds payable of $50,700 would be debited to bonds payable in order to show that the obligation has been discharged.

4 0
3 years ago
How do scarce resources influence you personally?
posledela
On many levels on a personal level lack of food makes me sad.
hope this helps
5 0
3 years ago
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