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velikii [3]
2 years ago
5

Kristian Thalen has just joined the corporate treasury group at Electrolux of Sweden, a multinational Swedish appliance maker. E

lectrolux is considering making an offer for GE’s appliance business and wants to revise its weighted average cost of capital for its analysis in its home currency, the Swedish kroner (SEK). Kristian has been assigned the task. Using the following assumptions, he goes step by step through the following questions.Component ValueSwedish kroner government bond yield (10-year) 4.30%Electrolux credit risk premium 1.20%Swedish corporate income tax rate 26.00%Electrolux beta 1.30Swedish equity market risk premium 4.00%Electrolux shares outstanding 286,130,000Electrolux share price SEK 182.00Electrolux debt outstanding SEK 11,532,000,000Required:A) What is Electrolux’s cost of debt, after-tax, in SEK?B) What is Electrolux’s cost of equity in SEK?C) What is Electrolux’s market capitalization?D) What is Electrolux’s total value of equity outstanding?E) What proportion of Electrolux; s capital structure is debt?F) What proportion of Electrolux’s capital structure is equity?G) What is Electrolux’s weighted average cost of capital?
Business
1 answer:
WITCHER [35]2 years ago
7 0

Answer:

See explaination

Explanation:

cost of debt, after-tax = (4.3% + 1.2%)*(1 - 26%) = 4.07%

cost of equity = 4.3% + 1.3*4% = 9.5%

market capitalization = 286130000 * 182 = 52075660000

total value of equity outstanding = market capitalization = 52075660000

Debt portion = 11532000000 / (11532000000 + 52075660000) = 0.18

Equity portion = 1 - 0.18 = 0.82

weighted average cost of capital = 0.18*4.07% + 0.82*9.5% = 8.52%

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Sammy created a new logo for his client to use on the company website and office stationery. However, the logo became a blur whe
pychu [463]

Answer:

Sammy needs to use a program and design the ad using density independent pixels.

Explanation:

Based on the scenario being described within the question it can be said that in the future Sammy needs to use a program and design the ad using density independent pixels. This will allow the design to correctly scale up and down by adding the correct ration or pixels needed so that the image is always as clear as originally intended. This will prevent such scenarios as this one.

7 0
2 years ago
A supermarket uses a periodic review system to manage inventory of gallons of drinking water. Average demand is 152 gallons of w
dem82 [27]

Answer:

The target inventory position is T= 713.6 gallons.

Explanation:

Given:

Average demand =per day = D = 152 Gallons

Standard deviation of demand = σ = 33 Gallons per day

Lead time for delivery = L = 4 days

Z value for 94.5% service level = 1.6

The target inventory position  = (Average demand x Lead time) + Safety stock

= (D × L) + (Z× σ × \sqrt{L})

= (152 × 4) + (1.6 × 33 × \sqrt{4})

= (152 × 4) + (1.6 × 33 × 2)

= 608 + 105.6

= 713.6

4 0
2 years ago
Peppercorn Inc. has outstanding nonconvertible preferred stock​ (cumulative) that pays a quarterly dividend of​ $1.00. If your r
Morgarella [4.7K]

Answer:

Quarterly dividend = $1.00

Required rate of return per annum = 8% = 0.08

Quarterly rate of return = 0.08/4 = 0.02

Current market price = <u>Quarterly dividend</u>

                                      Quarterly required rate of return

                                   = $1.00

                                       0.08

                                   = $12.5      

The amount to pay for 1,000 shares = $1.25 x 1,000 = $12,500

                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Explanation:

The current market price is calculated as quarterly dividend paid divided by quarterly required rate of return. Then, we will multiply the current market price by the number of shares in order to determine the total amount to pay for the shares.

5 0
2 years ago
A freelance writer must choose how to spend her time working on several different types of projects. Newspaper stories take 3 ho
Paraphin [41]

Answer:

3N + 25M + P ≤ 45

Explanation:

Let the number of Newspaper Stories taken=N

Newspaper stories take 3 hours to write.

Total Hour spent on Newspaper Stories=3N

Let the number of Magazine Articles taken =M

Magazine articles take much longer to write 25 hours per article.

Total Hour spent in Magazine Articles=25M

Let the number of Proofreading jobs taken =P

Proofreading pays for every 1 hour

Total Hour spent in Proofreading jobs=P

Since both newspaper stories and magazine articles must be completed in the week they are started.

The writer doesn't want to work more than 45 hours per week. So his total hour in a week is less than or equal to 45.

The Constraint that limits the amount of time the writer will work in a week is given as:

3N + 25M + P ≤ 45

7 0
2 years ago
To what extent do cost recovery deductions based on the capitalized cost of a tangible asset reflect a decline in the economic v
sladkih [1.3K]

Answer:

Cost recovery deductions do not have relationship to any decline in value of the property to which the deduction relates.

Explanation:

Capitalised costs are the cost that is incurred when building and financing a fixed asset. For example labour cost in building and financing an asset.

These expenses are added to the cost of the asset (capitalised) and taken gradually over time through depreciation, depletion, and amortization. They are not taken out of revenue in the period when they were incurred.

So cost deductions through capitalised cost is not related to the value of the asset but is an expense that is incurred in relation to the asset, and it's payment is spread out over time.

For example if $1,200 is incurred on construction of an asset worth $500,000. If $1,200 is capitalised over 12 months $100 will be deducted each month from expense. This does not affect the value of the asset ($500,000).

7 0
2 years ago
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