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Alenkasestr [34]
2 years ago
4

Gilbert & Sons is a leveraged firm. It has 300,000 shares of stock outstanding with a market price of $32 per share. The com

pany also has $6.6 million of debt outstanding that sells at par. The pre-tax cost of debt is 9 percent and the unlevered cost of capital is 12 percent. What is the cost of equity if the tax rate is 35 percent?
Business
1 answer:
Lerok [7]2 years ago
8 0

Answer:

13.34%

Explanation:

According to the MM theory :

re = ro + (ro - rd)(1-t)D/E

where re = cost of equity

ro = unlevered cost of capital

t = tax rate

d/e = debt to equity ratio

equity = 300,000 x $32 = $9,600,000

D/E = $6.6 million / $9.6 million = 0.6875

12% + (12% - 9%) x (1-0.35) x 0.6875 = 13.34%

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It will cost $7,000 to acquire an ice cream cart. Cart sales are expected to be $3,600 a year for three years. After the three y
Stels [109]

Answer:

It will take 2 years and 344 days to cover for the initial investment.

Explanation:

Giving the following information:

Initial investment= $7,000

Cash flow year 1 trough 3= $3,600

<u>The payback period is the time required to cover for the initial investment:</u>

Year 1= 3,600 - 7,000= -3,400

Year 2= 3,600 - 3,400= 200

<u>To be more accurate:</u>

(3,400/3,600)*365= 344

It will take 2 years and 344 days to cover for the initial investment.

8 0
2 years ago
Which of the following is an example of nonassertive behavior in a Western culture?A. Briefly gathering your thoughts before res
OLga [1]

Answer:

B. Avoiding eye contact when talking to people.

Explanation:

There are some people who do not have control over themselves. Oftentimes, others take undue advantage over them because they lack self confidence, and most often than not, do not always take charge of interpersonal relationships. This type of behavior is called non assertiveness.

Non assertive people easily gets influenced by people hence are termed as being manipulable. Some of the causes are ; lack of motivation, having high regards or expectation of others, always dwelling on the past, lack of focus on what they intend to achieve etc. However, this type of behavior can be corrected through constant feedback to whoever that is involved. Also, such people should be treated respectfully by giving them the attention they required.

4 0
2 years ago
What is the future value of $1,500 after 5 years if the appropriate interest rate is 6%, compounded semiannually?
kap26 [50]
Hi there
The formula is
A=p (1+r/k)^kt
A future value?
P present value 1500
R interest rate 0.06
K compounded semiannual 2
T time 5 years
So
A=1,500×(1+0.06÷2)^(2×5)
A=2,015.87

Good luck
5 0
2 years ago
Lois kay is an experienced baker. she has decided to bake and decorate her daughter's wedding cake instead of ordering one at th
ipn [44]

The fact that Key is an experienced baker and is motivated based on the joy of seeing her daughter's face as she first looks at the wedding cake made by her mother means that Kay's decision to produce the service herself was primarily guided by: expertise capacity and psychic rewards. The term expertise capacity denotes the know-how to do the service, while the psychic reward defines if she will receive reward on a job well done.


4 0
2 years ago
It costs Rockport Shrimp Fisheries, Inc. $30 to catch, process, freeze, package and ship 5-pound packages of gulf shrimp. Assume
Anit [1.1K]

Answer:

=$48

Explanation:

Mark-up refers to the intended profit margin: It is selling price -cost of production.

For  Rockport Fisheries:  cost of production is $ 30

Mark -up is 60 %. i.e., profit margin equal to 60 % of cost price

Selling price= cost +mark up

  = $30 + (60/100 x100)

  =$30+$18

  =$48

4 0
2 years ago
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