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iren [92.7K]
2 years ago
5

Western Electric has 31,000 shares of common stock outstanding at a price per share of $77 and a rate of return of 13.10 percent

. The firm has 7,200 shares of 7.60 percent preferred stock outstanding at a price of $94.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $398,000 and currently sells for 110 percent of face. The yield to maturity on the debt is 8.02 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent
Business
1 answer:
Aleksandr-060686 [28]2 years ago
4 0

Answer:

Weighted average cost of capital = 11.10%

Explanation:

Market value of common stock = $31,000 * 77 = $2,387,000

Market value of preferred shares = $7,200 * 94 = 676,800

Market value of debt = $398,000 * 110% = 437,800

Total market value = Market value of common stock + Market value of preferred shares + Market value of debt

= 2,387,000 + 676,800 + 437,800

= 3,501,600

Weight of common stock =  Market value of common stock / Total market value

= $2,387,000 / $3,501,600

= 0.6817

Weight of debt = Market value of preferred shares / Total market value

=437,800 / 3,501,600

= 0.1250

Weight of preferred stock = Market value of debt / Total market value

= 676,800 / 3,501,600

= 0.1933

Preferred dividend = 7.6% of 100 = 7.6

Cost of preferred stock = (Preferred dividend / price) * 100

Cost of preferred stock = (7.6 / 94) * 100

Cost of preferred stock = 8.0851%

Weighted average cost of capital = (Weight of equity *cost of equity) + (Weight of preferred stock * cost of preferred stock) + (Weight of debt * after tax cost of deb t)

Weighted average cost of capital = (0.6817 * 13.10%) + (0.1933 * 0.080851) + (0.1250 *0.0802*(1 - 0.39)

Weighted average cost of capital = 0.089303 + 0.015628 + 0.006115

Weighted average cost of capital = 0.1110

Weighted average cost of capital = 11.10%

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romanna [79]

Answer:

The return on equity for 2017 is 21.46 %

Explanation:

Return on equity measures the return earned on the owners investment in the company.

<em>Return on equity = Net Income for the year / Total Shareholders Funds × 100</em>

                            = $822 / ( $2,980 + $850) × 100

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Note : That Retained earning is part of Owners Investment.

Conclusion :

The return on equity for 2017 is 21.46 %

6 0
2 years ago
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses strai
Igoryamba

Answer:

Answer for the question:

On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment’s cost for income tax reporting in 2018. At December 31, 2020, the book value of the equipment was $48 million. At December 31, 2021, the book value of the equipment was $40 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $68 million. Required: 1. Prepare the appropriate journal entry to record Ameen’s 2021 income taxes. Assume an income tax rate of 25%. 2. What is Ameen’s 2021 net income?

Is given in the attachment.

Explanation:

4 0
2 years ago
You are a newly hired operations manager for Hospital XYZ. You are required to:
Sergeu [11.5K]

Answer:

Follows are the solution to this question:

Explanation:

follows are the tasks, which is not in the priority order and at hand at Hospital XYZ:

HR domain: share the latest recruitment procedures throughout the emergency department of public health.

Operations: nurse staffing methods for function or treatment.

Funding: Review financial requests for both the purchase of new protections on wax surfaces by protection from the environment.

IT: IT reviews complaints regarding a possible breach of information.

IT: Study application in the physician's office for the implementation of new technology.

If valuing such activities, it should remember, that this patient (client) becomes impacted mainly. The clinicians or staff involved in Tasks 1 & 2, because Task 2, the very first priority must be considered, and also some standards must be developed, by each nurse, with remote care issues.

Information from its daily client is provided to control the staff, and a specific training program is intended for both the newly employed and negative feedback staff.

Respondents-Patients, Professions

Task 1, which directly affects the daily quality of service in a hospital, should be the secondary priority, with such a smaller shortage of hospitals due to customer dissatisfaction.

Members – Patients, medical personnel, permanent employees, doctors.

Task 4 When information violation is alleged, the third priority should to the loss of important patient data to certain other entities that may use for financial gains.

Participants – IT department, patients.

Task 3 will help its hospital cleaner if funds are required to purchase new buffers. Especially in comparison with all the above 3 tasks, it was taken as the fourth priority.

It was important, and that does not affect mostly the client nor would it impact the level of service as large as the three tasks above.

Advisor position-representatives of finance, environment protection, clean folk (sweepers). advisor position

Task 5 Its latest radiology software review application is now to be approved as the last. It indicates why old software is already in place since it is a new program. Consequently, nothing's ever going to stoop or the task in other projects is no slowdowns. It can be achieved as the last goal.

Investors involved-officials of the IT agency, diagnostic agents.

The process improvement throughout the solution of the problems in the hospitals by providing them the necessary importance to identify the priorities of different tasks.

6 0
2 years ago
Which conclusion does this graph most support?
ahrayia [7]

Answer:

C. Product A has more elastic demand than product B.

Explanation:

The graph plotted above shows the quantity demanded for 2 products in relation to their prices.

Looking at the graph, we visually conclude that product A is more responsive to a change in price, compared to how responsive product B is to a change in price.

Invariably, a change in the price of commodity A causes a greater change in the quantity demanded, compared to a change in quantity demanded for product B, with almost the same change in price.

Option C is the answer.

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2 years ago
Jesse designs web sites and uses job order costing. On September 1, Jesse’s Work in Process account had a beginning balance of $
Elena L [17]

Answer:

Work in Process Inventory account at the end of September is $1,950

Explanation:

As all jobs at the beginning of september in the balance of Work in progress were finished, it's costs are now in Finished Goods Inventory. So are too, the two jobs started and finished during September. The Works in Process account records materials, labor and structure costs of order not finished yet at the end of the month.

At the end of september only Job 850 is not finished. The sum of materials, direct labor and overhed that is $1.950, is the balance of Work in Process Inventory account at the end of September.

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2 years ago
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