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ValentinkaMS [17]
3 years ago
15

Braxton Corp. has no debt but can borrow at 6.7 percent. The firm’s WACC is currently 8.5 percent, and the tax rate is 35 percen

t.
a. What is the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
b. If the firm converts to 20 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
c. If the firm converts to 40 percent debt, what will its cost of equity be?
d. If the firm converts to 20 percent debt, what is the company’s WACC?
e. If the firm converts to 40 percent debt, what is the company’s WACC?
WACC___%.

Business
1 answer:
Dmitry [639]3 years ago
4 0

Answer

The answer and procedures of the exercise are attached in the image below.  

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

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C. A market of buyers and sellers who exchange products and services between different countries, looks like the best option

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In a simple CAPM world which of the following statements is/are correct? I. All investors will choose to hold the market portfol
vagabundo [1.1K]

Answer:

The answer is: All of the options are correct

Explanation:

The Capital Asset Pricing Model (CAPM) states that a stock's rate of return is the sum of the risk free rate plus a risk premium. The advantage of the CAPM model is its simplicity, and that it can be used for every type of stocks.

In a simple CAPM world investors would operate the same way as they do now; They will hold investments portfolios that include risky assets; The investor's risk aversion should determine what stocks make up the portfolio; Risk returns should follow the same pattern; Investor will try to make their portfolios be as efficient and profitable as possible.

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3 years ago
Cosimo Enterprises issues a $260,000, 45-day, 5% note to Dixon Industries for merchandise inventory. Assume a 360-day year. For
zaharov [31]

Answer:

<u>Cosimo Enterprises</u>

cash 260,000 debit

   note payable    260,000 credit

--to record issuance of the note--

note payable   260,000 debit

interest expense  1,625 debit

            cash                  261,625 credit

--to record honor of the note--

<u>Dixon Industries</u>

note receivables 260,000 debit

                 cash          260,000 credit

--to record reception of a note--

cash       261,625 debit

       note receivable 260,000 credit

        interest reenue      1,625 credit

--to record honor of the note--

Explanation:

principal x rate x time = interest

where time and rate must be express in the same metric.

In this case portion of a 360 year

260,000  x 0.05 x 45/360 = 1,625

At maturity we write-off the note account and reocgnize the interest expense/revenue depending on which side we are.

if we issued the noe, we are doin an interest expense.

If we have the note we receive the cash get interest revenue.

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3 years ago
Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases
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Answer:

Instructions are below.

Explanation:

Giving the following information:

Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases are direct labor cost $492,000, direct labor hours 49,200, and machine hours 98,400.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Direct labor cost:

Estimated manufacturing overhead rate= 865,920/492,000= $1.76 per direct labor dollar

Direct labor hour:

Estimated manufacturing overhead rate= 865,920/49,200= $17.6 per direct labor hour

Machine-hours:

Estimated manufacturing overhead rate= 865,920/98,400=$8.8 per machine hour

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There are different types of risk which includes financial risks (which deals with losses in funds or investment), business risk(a risk directly involved with the business), non Business risk(risks that are associated with other aspects of society and are not business related).

WHEN THE A PROJECT HAS A HIGHER RISK COMPARED TO OTHERS THE BEST ACTION TO TAKE IS TO INCREASE THE COST OF CAPITAL USED TO EVALUATE THE PROJECT RO SHOW THAT THE PROJECT HAS A HIGHER RISK.

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