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
Julli [10]
3 years ago
10

Ace Industrial Machines issued 165,000 zero coupon bonds 6 years ago. The bonds originally had 30 years to maturity with a yield

to maturity of 6.4 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 5.5 percent. The bonds have a par value of $2,000. If the company has a $84.2 million market value of equity, what weight should it use for debt when calculating the cost of capital
Business
1 answer:
Mrac [35]3 years ago
8 0

Answer:

0.5202

Explanation:

Calculation to determine what weight should it use for debt when calculating the cost of capital

First step is to compute the Present value (PV) using financial calcualtor -

Put in calculator-

FV 2000

PMT 0

I 5.50%

N 24( 30 years- 6 years)

Compute PV ($553.31)

Second step is to calculate the Total value of debt

Price of bond = $553.31

*Number of bond = $165,000

=Total value of debt $91,296,150

($553.31*165,000)

Now let calculate the Weight of debt

Weight of debt =$91,296,150/($91,296,150+$84,200,000)

Weight of debt=$91,296,150/175,496,150

Weight of debt=0.5202

Therefore weight should it use for debt when calculating the cost of capital is 0.5202

You might be interested in
Davison Toaster Corp. sells its products for $250 per unit. It has the following costs:
dolphi86 [110]

Answer:

Break-even point in units= 1,860

Explanation:

Giving the following information:

Selling price= $250 per uni

Fixed costs= 109,900 + 290,000= $399,900

Unitary variable cost= 29 + 6= $35

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 399,900 / (250 - 35)

Break-even point in units= 1,860

7 0
3 years ago
What are the benefits of intrapreneurship to the Country​
kherson [118]
<h3><em>Ans</em><em>w</em><em>e</em><em>r</em><em>:</em><em>Organizations that have embraced Intrapreneurship have achieved higher financial returns, increased productivity, more innovation and higher levels of employee engagement.</em></h3>
3 0
2 years ago
Delta Construction Corporation, a general contractor, hires Eagle Electrical Company, a subcontractor, to wire a new office buil
nignag [31]

Answer: excused by Delta's failure to pay.

Explanation:

Delta Construction Corporation hires Eagle Electrical Company, as a subcontractor, to wire its new office building. After the completion of the work, Eagles is owed more than $50000.

Eagle's suspension of work is most likely due to the excuse by Delta's failure to pay. Delta has a right to pay up the money owed to Eagle. Lack of payment can lead to court cases.

3 0
3 years ago
Which of the followinThe IS-LM can be viewed as a special case of the AS-AD model where:
CaHeK987 [17]

Answer:

Short run aggregate supply curve is flat ( A )

Explanation:

The special case of the AS-AD following the IS-LM is that the short run aggregate supply curve is flat

This is because in an AS-AD model the price level is constant and AD represents an equilibrium point along IS-LM model,  hence the price been constant, shows that in short run aggregate supply curve will be flat.

7 0
3 years ago
Bob was married to Sandy, and they have a 12-year-old son. Sandy passed away last year. Bob needs to complete his federal income
lukranit [14]

Answer:

Qualifying widower with a dependent child

Explanation:

By filing as a widower with dependent child (the child is a necessary qualification requirement), Bob can use the same tax bracket and retain the same benefits as filing as married. This means that his income will be taxed at a lower rate than if he had filed as single, and he will obtain the same deduction as a married couple (twice the deduction for a single filer).

6 0
3 years ago
Other questions:
  • You are the pilot of a plane. There are 10 men with shirts off, 7 with shirts, 3 babys, 12 old ladys, 3 kids, and 24 mothers. Wh
    15·2 answers
  • Which situation best describes the role of businesse in the circular flow of goods
    9·1 answer
  • Which of the following describes the expected outcome of expansionary monetary policy in the short run?
    14·1 answer
  • Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its ave
    10·1 answer
  • -Provide public goods
    13·2 answers
  • Columbus Manufacturing's stock currently sells for $ 23.57 a share. The stock just paid a dividend of $2 a share (i.e.,D0=2). Th
    8·1 answer
  • A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unproces
    11·1 answer
  • GASB has issued a proposed standard that would more clearly define fiduciary activities and change the categories of fiduciary f
    12·1 answer
  • Gather secondary data by reading what others have experienced and observed. You should begin nearly every research project by re
    13·1 answer
  • Decision Point: International Market Analysis You've done a considerable amount of research and have determined the follöwing Ap
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!