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andre [41]
2 years ago
4

Upton Umbrellas has a cost of equity of 12.3 percent, the YTM on the company's bonds is 6 percent, and the tax rate is 39 percen

t The company's bonds sell for 103.9 percent of par. The debt has a book value of $429,000 and total assets have a book value of $959,000 If the market-to-book ratio is 2.95 times, what is the company's WACC? ? 10.09% o 558% ? 10.38% 8 35% ? 8.50%
Business
1 answer:
Vilka [71]2 years ago
3 0

Answer:

WACC = Ke(E/V) + Kd(D/V)

WACC = 12.3($1,563,500/$2,829,050) + 6($1,265,550/$2,829,050)(1-0.39)

WACC = 6.80 + 1.64

WACC = 8.4%

The correct answer E

                                                                             $

Market value of equity ($530,000 x  2.95) = 1,563,500

Market value of debt ($429,000 x 2.95)     = 1,265,550

Market value of the company                          2,829,050

Explanation:

In this case, there is need to calculate the market value of the company based on market-to-book ratio. Thus, the market value of the company is the aggregate of book value multiplied by market to book ratio. The book value of equity is the difference between the book value of total assets and book value of debt. WACC is the aggregate of cost of each stock and proportion of the market value of each stock to the market value of the company.

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nignag [31]

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8 0
2 years ago
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Jlenok [28]

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4 0
2 years ago
Sarah has prepared a script for the animation she wants to create. What is the next step she should follow? A. storyboarding B.
Ivenika [448]

Answer:

The correct answer is option D. choosing an animation tool

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I hope the answer was helpful.

Thanks for asking.

7 0
2 years ago
Omicron Technologies has $60 million in excess cash and no debt. The firm expects to generate additional free cash flows of $48
blondinia [14]

Answer:

The correct answer is $ 4.5714 which is not in the answer choice but is close to $432.00 million

Explanation:

Solution

Given that:

let us Assume that Omicron uses the entire $60 million to repurchase shares. The amount of the regular yearly dividends in the future is closest to is:

The Enterprise value =$48/0.10 = $480 million

Then,

The Market value = Enterprise value + cash = $480 + $60 = $540 million

Thus,

The Share price = market value / shares outstanding = $480 million / 12 million = $40

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The Shares outstanding = 12,000,000 - 1,500,000 = 10,500,000

Dividend = $48 million free cash flow / 10,500,000 = $4.571

8 0
2 years ago
Waite Company's comparative balance sheet and income statement for last year appear below: The company declared and paid $24,000
zepelin [54]

Answer:

c. $86,000

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8 0
2 years ago
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