Rogue Drafting has debt with a market value of $450,000, preferred stock with a market value of $150,000, and common stock with a market value of $350,000. If debt has a cost of 8%, preferred stock a cost of 10%, common stock a cost of 12%, and the firm has a tax rate of 30%, what is the WACC?
Answers
Answer:
the WACC is 8.65%.
Explanation:
Total firm capital = $450,000 + $150,000 + $350,000
= $950,000
Weight of debt in the capital structure = $450,000/ $950,000
= 47.37%
Weight of preferred stock in the capital structure
= $150,000/ $950,000
= 15.79%
Weight of common stock in the capital structure
= $350,000/ $950,000
= 36.84%
The weighted average cost of capital is calculated using the below formula:
WACC= Wd*Kd(1 - t) + Wps*Kps + We*Ke
where:
Wd = Percentage of debt in the capital structure.
Kd = The before tax cost of debt
Wps = Percentage of preferred stock in the capital structure
Kps = Cost of preferred stock
We = Percentage of common stock in the capital structure
Ke = The cost of common stock
T = Tax rate
WACC = 47.37%*8%*(1 – 0.30) + 0.1579*10% + 36.84%*12%
= 2.65272% + 1.5790% + 4.4208%
= 8.65252%
Therefore, the WACC is 8.65%.
Final answer:
The Weighted Average Cost of Capital (WACC) can be calculated by determining the weight of each component of the firm's capital structure and multiplying it by its respective cost. In this case, the WACC is 8.03%.
Explanation:
To calculate the Weighted Average Cost of Capital (WACC), we need to determine the weight of each component of the firm's capital structure and multiply it by its respective cost. The formula for WACC is:
WACC = (Debt / Total Capital) * Cost of Debt + (Preferred Stock / Total Capital) * Cost of Preferred Stock + (Common Stock / Total Capital) * Cost of Common Stock
Using the given information:
Debt = $450,000, Preferred Stock = $150,000, Common Stock = $350,000
Cost of Debt = 8%, Cost of Preferred Stock = 10%, Cost of Common Stock = 12%
We can substitute these values into the formula to calculate the WACC:
WACC = (450,000 / (450,000 + 150,000 + 350,000)) * 8% + (150,000 / (450,000 + 150,000 + 350,000)) * 10% + (350,000 / (450,000 + 150,000 + 350,000)) * 12%
Simplifying the equation:
WACC = 0.4 * 8% + 0.133 * 10% + 0.31 * 12%
Calculating the percentages:
WACC = 0.032 + 0.0133 + 0.0372
WACC = 8.03%
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O Tanya seeks to motivate employees to pursue organizational goals above their own self-interests.
O Tanya likes to provide the guidance and support needed by employees and ties meaningful rewards to completion of objectives.
Answers
Answer:
The correct answer is: All of the above.
Explanation:
Transformational leadership is the type of leadership that provokes change in individuals and the environment they interact with. It creates positive change in individuals to make them good leaders in the long run. Leaders guide their followers through inspiration, commitment, influence, and consideration.
Answers
Answer: $550,000
Explanation:
From the question, we are informed that Barney and Betty sold their home (sales price $750,000; cost $200,000) and that all the closing costs were paid by the buyer.
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B. grass
C. grain
D. milk
Answers
Answer:
The finest veal is milk-fed.
Explanation:
The finest veal is milk-fed.
Option - D
Explanation:
The meat of calves or younger male dairy breeds is said to be veal whereas the meat of older ones is called beef. Since the male calves cannot lactate, they are used for veal. In Culinary, the veal is mostly used in the form of cutlets, like cotoletta (Italian) or Wiener Schnitzel, the famous Austrian dish.
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Answers
Answer:
$4,250
Explanation:
The computation of the operating income or EBIT is shown below:
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= $12,500 - $7,250 - $1,000
= $4,250
We simply deduct the operating cost and the depreciation expense from the sales reported to arrive the earning before interest and taxes
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Answers
Answer:
The answer is 15.508%
Explanation:
The annual coupon rate is:
8% x 900 x 2 / $1,000 = 14.4%
The yield to maturity as follows:
Yield to maturity (YTM) = [Coupon payment + (Face Value - Present Value) / Time to Maturity] / [(Face Value + Present Value) / 2]
=> YTM = [14.4% x $1,000 + ($1,000 - $900) / 30] / [ ($1,000 + $900) / 2] = 15.508%
Final answer:
The yield to maturity (YTM) for a bond that has a face value of $1,000, semiannual coupon payments at an 8% rate, and a current market price of $900, can be calculated using the bond yield formula, considering certain variables like coupon payment, bond price, and periods until maturity. The YTM will be higher than the coupon rate as the bond is selling at a discount.
Explanation:
The yield to maturity (YTM) of a bond represents the internal rate of return earned by an investor who buys the bond today at the market price, provided that the bond is held until maturity. The yield to maturity can be calculated using the Bond Yield Formula:
P = [C * (1 - (1 + r) / r] + [F / (1 + r
]
Where: P = bond price; C = semiannual coupon payment; r = semiannual yield to maturity; n = number of periods (considering semiannual periods); F = face value of the bond.
Given a bond face value of $1,000, a semiannual coupon rate of 8% (or 4% per half year), a bond price of $900 and the number of periods of 60 (30 years * 2), you can calculate the yield to maturity by rearranging the formula and solving for 'r'.
Through this calculation process, you will find the yield to maturity is higher than the coupon rate, which is common when the bond is selling for less than its face value (a discount bond).
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Answers
Answer:
$1,684,084.19
Explanation:
If the company needs $31 million, and it must deposit 5% of what it borrows in a non-interest bearing account, then to have a net borrowing of $31 million, the amount it must borrow, B, is
B * (1 - 5%) = 31 million
= 0.95B = 31 million
and B = $32,631,578.95.
At 0.631% interest rate per month, for 8 months, the amount to be repaid after 8 months
=
Therefore, the amount paid in interest = 34,315,663.14 - 32,631,578.95
= $1,684,084.19.