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shutvik [7]
2 years ago
5

Peter's Audio has a yield to maturity on its debt of 7.8 percent, a cost of equity of 12.4 percent, and a cost of preferred stoc

k of 8 percent. The firm has 105 shares of common stock outstanding at a market price of $22 a share. There are 25 shares of preferred stock outstanding at a market price of $45 a share. The bond issue has a total face value of $1,500 and sells at 98 percent of face value. If the tax rate is 21 percent, what is the weighted average cost of capital assuming all interest is tax deductible
Business
1 answer:
OleMash [197]2 years ago
8 0

Answer:

= 9.5%

Explanation:

The weighted average cost of capital can be computed as follows:

After tax cost of debt :

= Before-tax cost of debt (1-T)

= 7.8% ×  (1-0.21)

= 6%

Market value

Equity = 105× 22= 2,310.00

Preferred stock = 25× 45= 1,125.00              

Bonds= 98% × 1500=<u>1,470.00</u>

Type                   cost    Market value         Cost × equity

Equity               12.4       2,310.00                  286.44

Preferred stock  8%          1,125.00              90.00

Bond                6%        <u>1,470.00 </u>              <u>1 90.58 </u>

                                        4,905.00         467.02

WACC = (467.02/4,905.00 ) × 100

          = 9.5%

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solniwko [45]

Answer:

1. Repetitive and continuous

2. Call

3. How, what, and when

4. Material problem

Explanation:

The work of Stickley furniture is described as repetitive and continuous. This is because, the company will continue to be producing the same kind of furniture continuous, This will be so because, furniture have a limited number of make. For example, furniture are chairs, tables, cabinet, stool and shelf. These things will be continually produced by the company.

The company will be able to keep track of job status and location through call.

Meanwhile, when the company received an order. The questions they will ask are, what type of furniture they want? When they want it?, How they want it delivered, is it in batches? Where they want it delivered?

7 0
2 years ago
Erickson Air is a large airline company that pays a customer relations representative $8,000 per month. The representative, who
Andreas93 [3]

Answer:

So total cost of processing Costumers in January is $7200

And total cost of processing Costumers in February is $6000

Explanation:

Total cost of Representative for the whole year = 8000×12 = $96,000

Total number of customers complaints processed in a year = 40,000

Therefore, cost of Processing per customer complaints = \frac{96000}{40000}=$2.4 per costumer complaint

Calculation of total cost of processing customer complaints:

Month Allocated Cost

So allocated cost in January = $2.4 ×3000 = $7200

And allocated cost in February = $2.4×2500 = $6000

5 0
2 years ago
Analyzing and Computing Accrued Warranty Liability and Expense Canton Company sells a motor that carries a 60-day unconditional
White raven [17]

Answer:

a. Warranty expense $480,000

b.  Warrant liability $96,000

Explanation:

Solution-a

Warranty expense = 3%*100,000*$160

Warranty expense = $480,000

Solution-b

Warranty liability = $480,000 -($160*2,400)

Warranty liability = $96,000

8 0
2 years ago
joes shoe shop raises prices from the equilibrium price of $40 a pair to its new price of $60 a pair.
kipiarov [429]
I think you’re referring to the competitive equilibrium price
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postnew [5]

Answer:

D.neither short- nor long term investment

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