Answer:
a. 6.52%
b. 11.06%
Explanation:
For determining the pretax cost of debt, first we have to first find out the after cost of debt which is
As we know that
WACC = Weighted × cost of debt + Weighted × cost of equity
8.3% = (1.15 ÷ 2.15) × cost of debt + (1.15 ÷ 2.15) × 12%
So after solving this the cost of debt is 5.08%
The 2.15 is come from 1 + 1.15
So the pre tax cost of debt is
= 5.08% ÷ (1 - 0.22)
= 6.52%
b. WACC = Weighted × cost of debt + Weighted × cost of equity
8.3% = (1.15 ÷ 2.15) × 0.059+ (1 ÷ 2.15) × cost of equity
After solving this, the cost of equity is 11.06%
The correct answer is B: be expanded.
I just took the test :)
Answer: 2.63
Explanation:
The Market to Book ratio is also referred to as the price to book ratio. It is a financial evaluation of the market value of a company relative to its book value. It should be noted that the market value is current stock price of every outstanding shares that the company has while the book value is the amount that the company will have left after its assets have been liquidated and all liabilities have been repaid.
The market-to-book ratio will be the market price per share divided by the book value. It should be noted that the book value per share is the net worth of the business divided by the number of outstanding shares. The book value will be:
= [(12500 ×1) + $21200]/12500
= ($12500 + $21200)/$12500
= $33700/12500
=$2.70
The market-to-book ratio will now be:
= $7.10/$2.70
=2.63
<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>