The claimed rate of return for all war bonds were : 5 %
Usually, this bonds were redeemable over a ten-year period and paid semi-anually (paid every six months)
this was used for financial budgeting from the war
Answer: 1.82
Explanation:
Following the information given, the number of years that it will take until this bond matures will be calculated thus:
Current price = $1021.26
Coupon = 8% = 0.08
Face value = $1000
Semiannual coupon = 0.08/2 × 1000 = 40
Semiannual Yield = 6.74%/2 = 0.0674/2 = 0.0337
Total semiannual period = NPER(0.0337, 40, -1021.26, 1000) = 3.64
Total years will now be: = 3.64/2 = 1.82
Therefore, the correct option is B.
Answer:
c. None of these
Explanation:
According to the scenario, computation of the given data are as follows,
Company Beta = 1.7
Risk free rate = 5%
Average market return = 16%
Marginal tax rate = 30%
So, we can calculate the after tax cost of equity by using following formula,
Cost of equity = Risk free Rate + company beta × Average market return
Cost of equity = 5% + (1.7 × 16%)
= 5% + 27.2%
= 32.2%
Answer: b. The optimal capital structure simultaneously maximizes stock price and minimizes the WACC
Explanation:
The optimal capital structure is simply defined as the capital structure of a company that's made up of debt and equity which helps a business in achieving its aim.
The optimal capital structure simultaneously maximizes stock price and minimizes the WACC. As economic agents always look out to maximize stock price, it should be noted that this can be achieved with a cost of capital that's at its minimum.
Cost of goods purchased in a merchandising company