1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
natulia [17]
2 years ago
6

Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 16 p

ercent, and the cost of debt is 8 percent. The relevant tax rate is 30 percent.
(a) What is Mullineaux’s WACC?
(b) The company president has approached you about Mullineaux’s Capital structures. He wants to know why the company doesn’t use more preferred stock financing, since it costs less than debt. What would you tell the president?
Business
1 answer:
yKpoI14uk [10]2 years ago
6 0

Answer and Explanation:

a. The computation of the wacc is as followS;

= cost of common stock × weight of common stock + cost of debt × weight of debt × (1 - tax rate)

= 0.16 × 0.70 + 0.08 × 0.30 × (1 - 0.30)

= 0.112 + 0.0168

= 0.1288

= 12.88%

b. The after tax cost of debt is

= 0.08 × (1- 0.30)

= 0.056

So the capital should use the cost of debt

You might be interested in
True or false? Individual electronic components can be combined into larger groups, called diodes, to increase their usefulness.
Butoxors [25]
This is False.

A diode is something completely different, but can be found in a computer and is an important electronic part.
8 0
3 years ago
The primary responsibility for fair and accurate financial reporting rests with the:
Nikitich [7]

Answer:

The correct answer is (D)

Explanation:

Financial reporting is a complex task which requires an expert to handle them accurately. Companies make many changes in the real data to slip from government taxes and they usually report losses. Auditors are the one responsible to find discrepancies in the financial reporting. So, the primary responsibility rests with the auditors for accurate financial reporting.

5 0
3 years ago
What is meant by the term "piercing the corporate veil"?select one:a.corporate directors and/or officers may be held personally
disa [49]
<span>Typically, a corporation is considered to be a unique and seperate entity from it's Board Directors and Shareholders. "Piercing the corporate veil" is the act of legally holding those Directors or Shareholders personally liable and responsible for the Corporation's actions or liabilities.</span>
6 0
3 years ago
The name group of explorers that Louiseana purcha
sdas [7]
It was called the “ Lewis and Clark Expedition” or “ The Crops Of Discovery”. Hopefully this helped!!
4 0
3 years ago
Phildell Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax rate f
AysviL [449]

Answer:

Total deduction                               2,443.21

Explanation:

8,288

x 6.20% Sccial Security                      513.856

x 1.45% Medicate                                120.176

x 6.20% FUTA&SUTA  (for 7,000)       434              

Income tax witheld                           1,375.17

Total deduction                               2,443.21

We will multiply his taxable wages for period by the tax rate.

We must noticew FUTA and SUTA applies fdor the first 7,000 only so we multiply by 7,000 not by 8,288

3 0
3 years ago
Other questions:
  • What would casualty insurance policy cover?
    15·2 answers
  • Dorothy Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following e
    11·1 answer
  • If a business hires employees to perform different, highly specialized jobs,
    8·1 answer
  • A parcel delivery company delivered 103,500 packages last year, when its average employment was 86 drivers. This year the firm h
    8·1 answer
  • However, Rina's decision regarding how many workers to use can vary from week to week because her workers tend to be students. E
    11·2 answers
  • Of the securities listed below, which would be exempt from the registration requirements of the Uniform Securities Act?I. Securi
    5·1 answer
  • Assume you are the internal controls expert for your company. Your boss has read about Madoff’s Ponzi scheme described in a page
    8·1 answer
  • Which of these describes what can happen with an adjustable-rate mortgage?
    11·2 answers
  • What is the term given to a specialized accounting book or computer program in which information is transferred into specific ca
    11·1 answer
  • Flexible Budgeting At the beginning of the period, the Fabricating Department budgeted direct labor of $72,000 and equipment dep
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!