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Sonja [21]
2 years ago
8

To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to ma

turity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,025, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.a. 5.39%b. 6.09%c. 5.93%d. 5.93%e. 4.69%
Business
1 answer:
ArbitrLikvidat [17]2 years ago
8 0

Answer:

a. 5.39%

Explanation:

This question is asking for the after-tax cost of debt ;which is the YTM

Using a financial calculator, enter the following and adjust the time, and coupon payments to semiannual basis;

Maturity of the bond ; N = 20*2 = 40

Face value; FV = 1000

Price; PV  = -1,025

Semiannual coupon payment; PMT = (9.25%/2)*1000 =  46.25

then compute semiannual interest rate; CPT I/Y = 4.489%

YTM (Pretax cost of debt ) = 4.489% *2 = 8.98%

WACC uses the aftertax cost of debt;

aftertax cost of debt = pretax cost of debt (1-tax)

= 8.98% *(1-0.4)

= 5.388%

Therefore, the component cost of debt for use in the WACC calculation is 5.39%

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Acceptance. Altisource Portfolio Solutions, Inc., is a global corporation that provides real property owners with services, such
baherus [9]

Answer:

Throughout the clarification segment elsewhere here, the definition including its issue is mentioned.

Explanation:

  • The very first e-mailed submission from Altisource that doesn't even dispute Lucas' suggestion would have been the proposal which most definitely meets the part of the arrangement to create a contract. It is when Altisource's e-mail was approved that they committed to it. Today, if a new arrangement with added provisions is presented two days after ratification, it can not be accepted as an aspect of the binding agreement.
  • If they could have some trouble with the arrangement, they could've just discussed the based distribution and therefore not approved the agreement. It would never be altered until they have approved it but the same could be known as either a contract arrangement.

5 0
2 years ago
Marco was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors
Liono4ka [1.6K]

n the video, Marco says he was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors. Clearly, learning about this field is important to him. Mike and Bob are addressing ............... when they send Marco to seminars instead of, for example, increasing his salary in exchange for his continued high performance at MBSC. They could maintain Marco’s high level of motivation by:........................

A. Sending him on an all-expense-paid Caribbean cruise for two weeks

B. Reimbursing his tuition as he seeks a master’s degree in fitness management

C. Reassuring him that he has a job with MBSC as long as he performs well

D. Setting up an employee discount program at a nearby coffee shop, laundromat, and tasalon

Answer:

Valence

C. Reassuring him that he has a job with MBSC as long as he performs well

Explanation:

By sending Marco to seminars, Mike and Bob are addressing VALENCE;  a psychological value  an individual put on  another person, in relation to the attractiveness of individual whose a psychological value has been placed. In this case, a psychological value placed on Macro by his managers is the valuable rewards they would get from his professional development, rather than increasing his salary in exchange for high performance.

Therefore, they could maintain Marco’s high level of motivation by reassuring him that he has a job with MBSC as long as he performs well.

7 0
1 year ago
1. Describe Village Volvo's service package.
Novay_Z [31]

Answer:

See the explanation for the answer.

Explanation:

1. Village Volvo’s service package involves following 5 service package:-

a) Implicit Service:-Mechanics of Volvo provides very friendly environment with positive attitude. They acts as helping hand to customers by providing them advice/consultancy.

b)  Explicit Service:-Volvo provide high quality of repair services with a reasonable price thereby ensuring that all Volvo vehicles are running smoothly with no problems.

c)   Facilitating goods:-They provide good waiting area for their customers with services such as TV, coffee, soft drink machine newspaper.

d)  Supporting facility: - They occupy new building and keep it neat and clean. This building include all facilities as per requirement.

e)  Information:-Mechanic understand vehicle’s problem first, analyze solution and notify customer with estimated cost and time required.

2. Distinctive characteristics of a service firm illustrated by Village Volvo are:-

a)  Trust

b)  Customer comfort and satisfaction

c)  Respect

3. Village Volvo can manages its back office like a factory by adoption framework of quality management i.e

a)  Giving more importance to safety of its employees.

b)  Stressing more on security of its employees

c)  Create friendly environment for employees to work in and provide employee satisfaction.

d)  Provide a sustainable growth.

4. Village Volvo can differentiate itself from Volvo dealers from following ways:-

a)  Sustainable customer touch points.

b)  Professional mechanics/agents

c)  Through service excellence, village Volvo can create a differentiation.

3 0
1 year ago
A perfectly elastic demand curve implies that the firm: A) must lower price to sell more output. B) can sell as much output as i
dsp73

Answer:

A perfectly elastic demand curve means that the firm can sell as much output as it chooses at the current price.

Explanation:

The perfectly elastic demand implies that the demand curve is horizontal line parallel to the X axis. The price is fixed at a point and the firm can sell any amount of output at this point. The demand is infinite at the given price level. If the firm makes any changes in this price level, the demand will become zero.

4 0
1 year ago
A proposed project has fixed costs of $83,000 per year. The operating cash flow at 9,100 units is $ 102,900. Ignoring the effect
natta225 [31]

Answer:

Ignoring the effect of taxes, what is the degree of operating leverage?

  • 1.81

If units sold rise from 9,100 to 9,500, what will be the increase in operating cash flow?

  • $8,171.43 or 7.94%

what is the new degree of operating leverage?

  • 1.75

Explanation:

degree of operating leverage = (units sold x contribution margin) / [(units sold x contribution margin) - fixed costs]

(units sold x contribution margin) - fixed costs] = $102,900

units sold x contribution margin = $102,900 + $83,000 = $185,900

degree of operating leverage = $185,900 / $102,900 = 1.81

contribution margin = $185,900 / 9,100 = $20.4286

operating cash flow (at 9,500 units) = (9,500 x $20.4286) - $83,000 = $111,071.43

operating cash flow will increase by $8,171.43 or 7.94%

new degree of operating leverage = $194,071.43 / $111,071.43 = 1.75

8 0
1 year ago
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