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ValentinkaMS [17]
2 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]2 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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What must be the price of a $10000 bond with a 6.8% coupon rate, semiannual coupons, and eight years to maturity if it has a yie
Neko [114]

Answer:

Coupon (R) = 6.8% x 10,000 = $680

Face value (FV) = $10,000

Number of times coupon is paid in a year (m) = 2

No of years to maturity = 8 years

Yield to maturity (Kd) = 8% = 0.08

Po = R/2(1- (1 + r/m)-nm) +  FV/ (1+r/m)n m

                      r/m

Po = 680/2(1-(1+0.08/2)-8x2) + 10,000/(1 + 0.08/2 )8x2

                          0.08/2                              

Po = 340(1 - (1 + 0.04)-16)    + 10,000/(1 + 0.04)16

                      0.04                            

Po = 340(1-0.5339) + 10,000/1.8730

                 0.04

Po = 3,961.85 + 5,339.03

Po = $9,300.88

Explanation:

The current market price of a bond is a function of the present value of semi-annual coupon and present value of the face value. The present value of semi-annual coupon is obtained by multiplying the coupon by the present value of annuity factor at 8% for 8 years. The present value of face value is obtained by discounting the face value at the discount factor for 8 years. The addition of the two gives the present value of the bond. All these explanations have been captured by the formula.

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2 years ago
9.
svp [43]
A. By eliminating the effects of price increases on GDP growth. Nominal GDP is calculated using the current prices while Real GDP is adjusted for inflation.
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A difference in quantity of materials used on two comparable jobs may be caused by a.employee carelessness b.poor quality materi
Elodia [21]

Answer: d.All of these choices are correct.

Explanation:

All the above can result in different quantities of materials being used for comparable jobs.

Employee Carelessness can cause more material to be used if they fail to adequately measure the Requirements of a job. If they are also careless in the usage of the material, there will be wastage and therefore a larger use of materials.

Poor Quality Materials can also result in different quantities being used because for instance, more material could be required to do something that a stronger material could have easily done.

Inadequately trained Employees is a major reason for Material Wastage. If employees are not trained by seasoned people who know how to reduce wastage, that knowledge could take time to come to them. If they were adequately trained however, they can master the tricks on wastage avoidance and limit discrepancies in the amount of materials used per comparable jobs.

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PLS HELP!! Complete the following sentence.<br> Making sales is the primary mission of a sales___
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Answer:

Salesman

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3 years ago
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Bill Dukes has $100,000 invested in a 2-stock portfolio. $32,500 is invested in Stock X and the remainder is invested in Stock Y
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Answer:

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First step is to find the Investment in Y which is:

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Second step is to calculate for the Portfolio beta using this formula

Portfolio beta=Respective beta*Respective Investment weight

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Portfolio beta=(0.35*1.5) +(0.65*0.7)

Portfolio beta =0.525 +0.455

Portfolio beta=0.98

Therefore the Portfolio Beta will be 0.98

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