Answer:
Verano Inc. should use its cost of equity capitakl for waste water business = 6%
Explanation:
The appropriate cost of capital to evaluate the business should be for the same business. Here Verano is considering a purchase of another company in the waste water business using equity financing so the cost of equity of the waste water business should be considered for evaluation of the Proposal.
The cost to produce today = 74000
At a discount of 12%, the future value of costs in 5 years = PV*(1+r)^n where PV = 74000, r= 12% = 0.12 and n = 5 years = 5
The value of costs in 5 years = 74000*(1+0.12)^5
The value of costs in 5 years = 74000*1.12^5
The value of costs in 5 years 130,413.28
Price in 5 years = 138,000
Profit = 138,000-130,413.28 = 7,586.72
The profit the firm will make on this asset (considering time value of money) = $7,586.72
Being a new home owner, I can tell you a few tax deductibles. They are:
1. Mortgage interest
2. Property taxes
3 Moving costs
Answer:
d. 12.72%
Explanation:
To calculate the expected return on the market, we will use the Capital asset pricing model (CAPM) equation.
The CAPM allows to relate the risk-free rate of return (RFROR), the market risk premium, the beta of an asset and the expected return of this asset.
Expected return = risk-free ROR + (Beta*Market risk premium)
In this case we know all the parameters but the Market risk premium (MRP), so we have:
We also know that the beta of the market, by definition, is equal to one. So now that we know the market risl premium we can calculate the expected return on the market:
The expected return on the market is 12.72%.
Answer:
$1.41144
Explanation:
<em>Assuming that </em><em>distribution of its earning to its shareholder is 30% </em><em>as against the 0% which is likely a mistake because the tax rate on dividend income of 27% is also given in the question</em>
Earning before tax $13
Less: Corporation tax <u>$5.46</u>
($13 * 42%)
Earnings after tax <u>$7.54</u>
<u />
Dividend distribution = $7.54 * 30% = $2.262
After tax dividend = $2.262 * (1-0.27) = $2.262 * 0.78 = $1.7643
Shareholder earnings after Income tax = $1.7643 * (1 - 0.20) = $1.7643 * 0.80 = $1.41144
Therefore, the Shareholder earnings from the Corporation assuming the <em>distribution of its earning to its shareholder is 30% </em>is $1.41144
