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Nat2105 [25]
2 years ago
10

You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 =

$42.50; g = 7.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?
Business
1 answer:
Fynjy0 [20]2 years ago
8 0

The cost of equity raised by selling new common stock is 11.33%.

Using this formula

re = D1/(P0 × (1 - F)) + g

Where:

re=Cost of equity=?

Dividend(D1)=$1.75

Stock price(P0)=$42.50

Growth rate(g)=7.00%

Floatation cost (F)=5.00%

Let plug in the formula

re =1.75/(42.50 × (1 - 0.05)) + 0.07

re=1.75/(42.50×0.95)+0.07

re=(1.75/40.375)+0.07

re=0.04334365+0.07

re=0.1133×100

re=11.33%

Inconclusion the cost of equity raised by selling new common stock is 11.33%.

Learn more about cost of equity here:brainly.com/question/25651592

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In the 1980s, the U.S. government forced Japanese automakers to limit their exports to the United States. The union representing
never [62]

Answer:

A) save domestic jobs

Explanation:

Domestic jobs: These are the categories of jobs that are available in the national country of the company or within the boundary of the country, which has a preference for the local population and has more responsibility toward national´s resources, however, foreign companies have less responsibility toward national´s resources and their sole motive is to earn profit at a lesser cost.  

In the given case, Japanese company´s export to the U.S have affected the domestic jobs as their motive is to maximize profit, which leads to an argument for protection of domestic job in U.S auto industry, therefore, US government have limited the export of Japanese automaker.

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3 years ago
Which of the following circumstances usually comes before a period of economic contraction?
erik [133]
C
A low GDP for two or more consecutive quarters is usually followed by economic contraction. 
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3 years ago
Under the Uniform Securities Act, which of the following negates a client's right to a civil suit for damages?
DanielleElmas [232]

Answer:

I

Explanation:

The Uniform securities act is a framework that serves to protect investors as it guides the states securities regulation in managing security related fraud and also helps the security exchange commission's enforcement and regulation .

It allows the clients right to civil suit for damages under certain conditions except a situation such as when the advice that is the subject of the suit was given more than three years ago.

A civil suit can only be filed on the earlier of "within 3 years of the alleged infraction or 2 years of the discovering of the violation"

5 0
3 years ago
Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio o
algol13

Answer:

A. $516,000

B. $696,600

Explanation:

A. Calculation to to determine the value of the Company's equity

First step is to calculate the Net income

Sales1,540,000

Less: Cost of goods sold790,000

Less: General and administrative costs525,000

Less: Interest expenses53,000

Income before corporate tax 172,000

Less: Corporate tax 40% 68,800

(40%*172,000)

Net income103,200

(172,000-68,800)

Now let determine the value of the Company's equity using this formula

Value of the Company's equity

= Net income/ cost of the firm’s levered equity

Let plug in the formula

Value of the Company's equity = $103,200/0.20

Value of the Company's equity = $516,000

Therefore The Value of the Company's equity is $516,000

B. Calculation to determine the total value of Company equity

First step is to calculate the Debt

Debt equity Ratio = 0.35

Debt/Equity = 0.35

Debt/ $516,000 = 0.35

Debt = $516,000 * 0.35

Debt =$180,600

Now let determine The Company’s value using this formula

Company’s Total value = Equity + Debt

Let plug in the formula

Company’s Total value = $516,000 + $180,600

Company’s Total value = $696,600

Therefore the total value of Company equity is $696,600

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Answer:

Audience and purpose.

Hopefully this helps! :)

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