Answer:
c. 12.56%
Explanation:
Debt-to-value=D/(D+E) =0.4=> D=0.4D + 0.4E => 0.6D = 0.4E => D/E=4/6=2/3
According to M&M proposition II with taxes,
re=r0+(D/E)(r0-rd)(1-Tax rate)
. Where re= levered cost of equity(or cost of equity when the firm is levered)=.1492, r0 = unlevered cost of equity,Tax rate=34%=.34, rd=pretax cost of debt=7.2%=0.072,D/E=2/3
re = r0+(2/3) * (r0 - 0.072)*(1-.34)
=> 0.1492=r0(1+(2/3)*(1-.34)) -(2/3)*(.072)*(1-.34)
=> 0.1492 = r0(1+0.44) -0.03168
=> 0.1492 = 1.44*r0 -0.03168
r0 = (.1492+0.03168)/1.44
r0 =0.1256
r0 =12.56%
Thus, r0=unlevered cost of equity=12.56%
Answer:
$23,709
Explanation:
Data provided in the question:
Amount of bond issued = $700,000
Duration = 5 years
Interest rate = 8%
Selling amount of bond = $728,700
Market rate of interest = 7%
Now,
Interest paid = Amount of bond issued × Interest rate
= $700,000 × 0.08
= $56,000
Interest expense = Amount of bond sold × Market Interest rate
= $728,700 × 0.07
= $51,009
unamortized premium = Selling amount of bond - Amount of bond issued
= $728,700 - $700,000
= $28,700
Amortized amount = Interest paid - Interest expense
= $56,000 - $50,009
= $4,991
Balance of the premiums on bonds payable account immediately following the first interest payment
= unamortized premium - Amortized amount
= $28,700 - $4,991
= $23,709
This is known as in-sample forecast. It estimated the model using all available data and then comparing it to the model's fixed values to the actual realizations. But, this method is known to attract an overly positive picture of the model's forecasting ability since common fitting algorithms tend to take pains to avoid big prediction errors and are also inclined to overfitting (mistaking noise for signal in the data).
Answer:
May's sales that are expected to be noncollectable are $7500.
Explanation:
The total collections from a months's credit sales is expected to be as follows,
35% in the month of sale
54% in the following month
6% in the second month after sale
The remaining is expected to be noncollectable.
The credit sales for a month are equal to 100%.
The percentage of noncollectable sales is = 100 - (35 + 54 + 6) = 5%
Thus, 5% of each month's sale is expected to be noncollectable.
May's sales that are expected to be noncollectable are,
Noncollectable Sales-May = 150000 * 0.05 = $7500
Bachelors degree is the minimum <span />
