saul goodman and associates are investing in a major capital budgeting project that will require the expenditure of $20 million. the money will be raised by issuing $8 million of bonds, $2 million of preferred stock, and $10 million of common stock. the company estimates its after-tax cost of debt to be 4.50%, its cost of preferred stock to be 9%, and the cost of common stock to be 14%. the firm has a marginal tax rate of 45%. what is the weighted average cost of capital (wacc) for this project?
Answers
The weighted average cost of capital (WACC) for this project will be approximately 9.70%.
To calculate the weighted average cost of capital (WACC), we need to determine the weight of each component of the capital structure (bonds, preferred stock, and common stock) and multiply it by the respective cost of capital. Then we sum up these weighted costs to find the overall WACC.
Given information; Amount raised by issuing bonds = $8 million
Amount raised by issuing preferred stock = $2 million
Amount raised by issuing common stock = $10 million
Cost of debt (after-tax) = 4.50%
Cost of preferred stock = 9%
Cost of common stock = 14%
Marginal tax rate = 45%
Calculate the weights of each component
Weight of debt = Amount of bonds / Total capital raised
Weight of debt = $8 million / ($8 million + $2 million + $10 million)
Weight of debt = $8 million / $20 million
Weight of debt = 0.4 or 40%
Weight of preferred stock = Amount of preferred stock / Total capital raised
Weight of preferred stock = $2 million / ($8 million + $2 million + $10 million)
Weight of preferred stock = $2 million / $20 million
Weight of preferred stock = 0.1 or 10%
Weight of common stock = Amount of common stock / Total capital raised
Weight of common stock = $10 million / ($8 million + $2 million + $10 million)
Weight of common stock = $10 million/$20 million
Weight of common stock = 0.5 or 50%
Calculate the weighted cost of each component:
Weighted cost of debt = Weight of debt × Cost of debt (after-tax)
Weighted cost of debt = 0.4 × 4.50%
Weighted cost of debt = 1.80%
Weighted cost of preferred stock=Weight of preferred stock × Cost of preferred stock
Weighted cost of preferred stock = 0.1 × 9%
Weighted cost of preferred stock = 0.90%
Weighted cost of common stock = Weight of common stock × Cost of common stock
Weighted cost of common stock = 0.5 × 14%
Weighted cost of common stock = 7.00%
Calculate the WACC
WACC = Weighted cost of debt + Weighted cost of preferred stock + Weighted cost of common stock
WACC = 1.80% + 0.90% + 7.00%
WACC = 9.70%
Therefore, the weighted average cost of capital is 9.70%
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Related Questions
How does marketing help your product or service
Answers
Answer:
Marketing informs your customers about the products or services you're offering them. Through marketing, the customers get to know about the value of the products, their usage and additional info that might be helpful to the customers. It creates brand awareness and makes the business stand out.
Explanation:
Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $50. The cost of each light is $1. The holding cost is $0.10 per light per year.
Answers
Answer:
The right solution is:
(a) 4,272 units
(b) $134.16
(c) $134.17
(d) $12,268.33
Explanation:
Seems that the given question is incomplete. The attachment of the complete question is provided below.
According to the question, the values are:
Annual demand,
D = 12,000
Number of days,
= 300
Daily demand,
d = \(\frac{12000}{300}\)
= 40
Production rate,
P = 100
Ordering cost,
S = $50
Holding cost,
H = $0.10
(a)
The production run's optimal size will be:
Q = \(\sqrt{\frac{2DS}{H(1-\frac{d}{P} )} }\)
By putting the values, we get
= \(\sqrt{\frac{2\times 12000\times 50}{0.10\times (1-\frac{40}{100} )} }\)
= \(\sqrt{20,000,000}\)
= \(4,471.14\)
or,
= \(4,472 \ units\)
(b)
The average holding cost will be:
= \(\frac{Q}{2}\times H\times [1-\frac{d}{P} ]\)
= \(\frac{4472}{2}\times 0.10\times [1-\frac{40}{100} ]\)
= \(134.16\) ($)
(c)
The average setup cost will be:
= \(\frac{D}{Q}\times S\)
= \(\frac{12000}{4472}\times 50\)
= \(134.17\) ($)
(d)
The total cost per year will be:
= \(Avg. \ holding \ cost+ Avg. \ setup \ cost+Cost \ of \ purchase\)
= \(134.16+134.17+(1\times 12000)\)
= \(12,268.33\) ($)
what are the pros and cons of being a program director
Answers
Answer:
Con- it takes a looong time
do you feel that countries and companies need explicit strategies for technology development, given the tremendous amount of largely spontaneous creativity that occurs today, often in areas where new technologies are not expected to exert a great influence.
Answers
Countries and businesses require explicit strategies for technological development, according to the current market and business scenario, companies and countries use the most recent and up-to-date technologies.
What is meant by explicit strategies?Explicit strategies for technological development are unnecessary for countries and businesses. They may desire it in order to improve business processes and adapt to new technologies. Explicit strategies are those that are well defined and implemented in order to have clear technological development to the specified business structures. Implicit strategies, on the other hand, tend to confine companies and countries to a specific way of thinking, resulting in more concise technological development. This strategy would aid in simulating innovation and creativity in technological development.Because of the increase in technological advancement and Internet usage, our reliance on technology and its applications has changed in all aspects of our daily lives. Businesses must address the current demands of modern customers and the market, so IT-enabled solutions are required to achieve organizational goals and objectives.To learn more about strategy refer to :
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Yes i feel that countries and companies need explicit strategies for technology development, given the tremendous amount of largely...in areas where new technologies are not expected to exert a great influence.
Give a brief account on technological development.The process of developing new technologies or methods through invention, innovation, and spread is known as technological change (TC) or technological development. In essence, technological change includes the creation of technologies (including processes) and their commercialization or release as open source through research and development (producing emerging technologies), the continuous improvement of technologies (in which they frequently become less expensive), and the dissemination of technologies throughout industry or society (which sometimes involves disruption and convergence). To put it simply, better and more technology are the foundations of technological change. The "Linear Model of Invention," which was once used to illustrate technological change, has largely been abandoned in favour of a model of technological change that incorporates innovation at all stages of research.
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I need two answers please by 2pm today.
Are you motivated more by intrinsic rewards (satisfaction, sense of accomplishment, etc.) or by extrinsic rewards (money, bonuses, etc.)?
Answers
Intrinsic rewards can be more satisfying to a worker than extrinsic ones, because internal motivation is something natural that does not depend on external stimuli.
How does an employee get motivated?There is a set of characteristics that helps in motivation in the work environment. Intrinsic rewards correspond to job satisfaction. To be achieved, the employee needs to feel valued and fulfilled with their responsibilities at work.
Extrinsic rewards are related to external motivations, such as a good salary and bonuses.
Therefore, motivation is essential in the workplace, as it stimulates employee productivity, satisfaction and integration.
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Conclusion about public companies and state owned enterprises task
Answers
Public company is a company that has the opportunity to sell all or a portion of the company to the public where state-owned enterprise serves as a legal entity that is created by a government.
What is public and state owned company?A public company can be described as the company that can sell all or a portion of itself to the public .
A state-owned company on the other hand is a legal entity which is been created by a government for the sake of commercial activities which is been run on government's behalf.
Therefore, Public company is a company that has the opportunity to sell all or a portion of the company to the public where state-owned enterprise serves as a legal entity that is created by a government.
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True or False: The ending balance in your checkbook ledger is different from the bank statement when you have written checks that haven't yet been cashed.
Answers
Answer:
true
Explanation:
hope this helps!
define finance education for class 8
Answers
1. Give a brief description of the Business and Industry Endorsement.
Answers
Answer:
siness and Industry Endorsement.
;,;l,
Explanation:
the journal entries for a merchandiser to record the sale of a product are shown. Please create an example of a company selling a good and illustrate the journal entries, recording the revenue side and also the cost side.
For example: A retailer sells a TV to a customer for $500, where it had cost the retailer $200.
Debit Cash (Asset) $500
Credit Sales (Revenue) $500
Debit Cost of Goods Sold (Expense) $200
Credit Merchandise Inventory (Asset) $200
Answers
Journal entries for a merchandiser to record the sale of a product is as follows:Debit: Cash (Asset)Credit: Sales (Revenue)Debit: Cost of Goods Sold (Expense)Credit: Merchandise Inventory (Asset)In this case, let us consider an example of a company selling a good.
Suppose XYZ Company sells its product for $3000 where it had cost the company $1800 to produce. So the journal entry for recording the revenue and cost side will be as follows:Journal Entry:Debit: Cash (Asset) - $3000Credit: Sales (Revenue) - $3000Debit: Cost of Goods Sold (Expense) - $1800Credit: Merchandise Inventory (Asset) - $1800
Here, Cash and Sales account are involved. Therefore, we use Debit and Credit terms to record these transactions. When the company receives the cash for the sale of the product, the company debits the Cash account for $3000 and credit the Sales account for the same amount.Now, the second part of the transaction is recording the cost of goods sold. Cost of goods sold is an expense account, and the Merchandise Inventory is an asset account. So, when a company sells its product, it needs to record the Cost of Goods Sold for that product and reduce its Merchandise Inventory for the same amount.
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A customer opens a long margin account with only 1 position, consisting of 100 shares of ABC stock valued at $20 per share. There is no debit balance in the account. If the customer buys 100 shares of XYZ at $60 per share, the margin call will be
Answers
Answer:
The margin call will be $6,000.
Explanation:
Since there is no debit balance in the customer's margin account, it implies that the customer is not owing the broker on margin. The additional purchase of the 100 shares of XYZ necessitates the margin call by the broker for the customer to fund his margin account by paying additional funds worth $6,000 to cover the purchase of XYZ shares by the broker on his behalf.
A margin account is an account maintained by a broker on behalf of his customer through which the customer is able to buy and sell securities using his own funds and the broker's. The implication is that the customer's equity in the account is equal to the market value of the securities minus the borrowed funds from the broker.
A sales contact manager used by a salesperson is an example of a(n) ________.
Answers
A sales contact manager used by a salesperson is an example of a Customer Relationship Management (CRM) system.
CRM system helps the salesperson, who acts as a manager of customer interactions, to organize, track, and manage their contacts, leads, and customers. This system streamlines communication, allows for better customer service, and ultimately leads to increased sales. By using a CRM, the sales manager can easily monitor their sales pipeline, manage tasks, and maintain a strong relationship with their clients.
The CRM system provides valuable insights and data analysis, enabling the salesperson to make informed decisions and improve their sales strategy. Overall, a CRM is an essential tool for any sales manager looking to optimize their sales process and enhance customer relationships.
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smart manufacturing is achieved by instituting employee surveillance and monitoring.
Answers
For a manufacturing process to be smart instituting employee surveillance and monitoring is very important.
What is Smart Manufacturing?Smart Manufacturing also called CAD/CAM, computer aided design and computer aided manufacturing involves the integration of computer in the production of goods and services.
In recent times the concept of internet of things is being added to smart manufacturing for data collection
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Why is it important to have communication in a job ?
Answers
Answer:
Good communication can boost teamwork and lead to better project collaboration.
Answer:
- Good communication can boost teamwork and lead to better project collaboration. It applies to practically every industry.
- Workplace communication is important for streamlining internal communication. Maintaining effective communication ensures that management and the team below them are on the same page
- It disseminates the information needed by employees to get things done and builds relationships of trust and commitment.
- Workplace communication is vital to an organization's ability to be productive and operate smoothly.
- Workplace communication improves worker productivity.
I hope my answer helps you.
the united states is considered to have a high standard of living because:
A. the most important sector's of its economy are agricultural
B. most of its citizens have access to necessities like food.
C. a large number of its citizens struggle to find good jobs.
D. its currency is no longer tied to precious metals like gold.
Answers
Answer:
B. most of its citizens have access to necessities like food.
please help me!!! I literally have no clue what it is
Answers
Answer:
Critical Thinking,Mathematics, and Operation and Control.
Explanation:
Which two of the following are long-term sources, of finance?
A- Interest rates
B- Venture capital
C- Trade credit
D- Share capital
E- Start up costs
Answers
Answer:
the answer is B and D
branches of accounting
Answers
Financial Accounting. Financial accounting is a systematic method of recording transactions of any business according to the accounting principles.
Cost Accounting. Cost accounting is considered a type of managerial accounting.
Auditing.
Managerial Accounting.
Tax Accounting.
Forensic Accounting.
Fiduciary Accounting.
regardless of whether partners in a partnership work in the company, each partner is allocated an equal share of profits.
Answers
Actually, the allocation of profits among partners in a partnership can vary depending on the agreement made between the partners.
It is possible for partners who contribute more time, effort, or resources to the partnership work to receive a larger share of profits. The key is to have a clear and fair partnership agreement in place that outlines how profits will be distributed among partners.
In a partnership, the distribution of profits among partners depends on the terms of their partnership agreement. While it is possible that partners are allocated an equal share of profits regardless of their involvement in the partnership work, this is not always the case. The share of profits can be divided based on factors such as capital contribution, expertise, or other terms agreed upon by the partners. Therefore, it is essential to have a clear partnership agreement that outlines the distribution of profits among the partners.
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Which of the following are part of the marketing mix? (Check all that apply)
Answers
Answer:
product, price, place, promotion—are often referred to as the marketing mix. These are the key elements involved in marketing a good or service, and they interact significantly with each other.
Explanation:
PLZZ mark brainlyist
As you begin studying business law, you become overwhelmed by the sheer volume of laws that can affect business. You dive in and
begin the process of understanding where these laws come from; the first step in understanding how these laws apply to each other and
how they apply to your business.
You're looking at statutes that set out the penalties for forgery and learn that each state is free to make its own criminal laws that apply
just to that state. Which branch of government do you think creates statutes?
Answers
The branch of government that creates these statutes (business law) to regulate business practice is known as the Legislative branch.
What is a business law?This refers to those law that consists of the enforceable rules of conduct that govern commercial relationships.
Some examples of business law in the country sphere covers the area of employment Law, immigration Law, Consumer Goods Sales, Antitrust, Intellectual Property, Taxes etc.
The Legislative branch creates the business law to protect the consumers and regulate business activities.
In conclusion, the branch of government that creates these statutes (business law) to regulate business practice is known as the Legislative branch.
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which of the following are risks that Banks must prepare for select 3 answers
Answers
Answer:
I think the 3rd one it would be (Too many people taking money out at once)
Explanation:
is like if 4 people are asking you something at the same time it will be frustrating for the employees.
Hope it helps! :)
The bank risks that the banks must prepare for are:
Borrowers who don't pay the bank back.Too many people taking money out of the bank at once.Interest rates falling.What are bank risk?The bank risk can be defined as the risk suffered by the banks while carrying on its banking operations. The bank risk may arise due to customers, or other market factors.
To avoid the severe effects of the risks, banks must prepare for the risks in advance. The risk of lack of money or bad debts are some of the bank risks.
If many of the customers withdraw their money at once, this will affect the liquidity of the bank. When many lenders do not pay their debts, this too makes money shortage in the bank. Also fall in interest rate is a loss to the bank. These risks should be taken into prior consideration and they should be prepared before hand.
Therefore the correct options are:
Borrowers who don't pay the bank back.Too many people taking money out of the bank at once.Interest rates falling.Learn more about bank risk here:
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in the long-run neoclassical view, when wages and prices are flexible, ________ determine the size of real gdp.
a.potensial GDP and aggregtae supply
b.potensial GDP and aggregate demand
c. levels of output and aggregate supply
d.levels of wages and aggreagate demand
Answers
In the long-run neoclassical view, when wages and prices are flexible, Potential GDP and aggregate supply, determine the size of real gdp. The correct answer is option (A).
According to the neoclassical view, in the long run, wages and prices are flexible, and the economy operates at potential GDP, which is the maximum sustainable level of output given the economy's resources and technology. Potential GDP is determined by the supply side of the economy, which includes factors such as labor, capital, and technology.
In the neoclassical view, aggregate supply, which represents the total amount of goods and services that firms are willing and able to produce at different price levels, is determined by the factors of production and technology. In the long run, when wages and prices are flexible, the economy will adjust to changes in demand by changing output, rather than prices.Therefore, in the long run, changes in aggregate demand will only have a temporary effect on the economy's output and will not affect potential GDP. Instead, changes in potential GDP and aggregate supply will determine the size of real GDP in the long run. Hence the right answer is option (A).
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what is the final price you must pay, including tax, if you purchase an item for $17 with a sales tax of 4% ?
Answers
The final price you must pay, including tax, is $17.68.
To calculate the final price you must pay, including tax, for a purchase of $17 with a sales tax of 4%, you need to first find the amount of the sales tax by multiplying $17 by 4%:
$17 * 0.04 = $0.68
Next, add the amount of the sales tax to the original price of the item to find the final price:
$17 + $0.68 = $17.68
So, $17.68 is the final price you need to pay.
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Ursula would like to link the networks in her on-premises datacenter with cloud VPCs in a secure manner. What technology would help her best achieve this goal
Answers
To securely link the networks in her on-premises datacenter with cloud VPCs (Virtual Private Clouds), Ursula can best achieve this goal by utilizing a Virtual Private Network (VPN) technology.
Virtual Private Network (VPN) technology enables secure communication and connectivity between different networks over the internet. It creates an encrypted tunnel that allows data to be transmitted securely between Ursula's on-premises datacenter and the cloud VPCs.
By implementing VPN technology, Ursula can establish a secure and private connection between her on-premises network and the cloud VPCs. This ensures that data transferred between the networks remains protected from unauthorized access or interception.
With VPN, Ursula can extend her on-premises network to the cloud VPCs, enabling seamless and secure communication between the two environments. This allows her to leverage the benefits of cloud services while maintaining the security and control of her on-premises infrastructure.
Overall, VPN technology provides Ursula with a reliable and secure solution to link her on-premises datacenter with cloud VPCs, enabling efficient and protected communication between the networks.
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if macroeconomics looks at the economy as a whole, it focuses on which of the following? question 6 options: a) households b) business firms c) unemployed people d) the division of labor
Answers
If macroeconomics looks at the economy as a whole, it focuses on unemployed people.
What is macroeconomics?The performance, structure, behavior, and decision-making of an economy as a whole are the focus of the economics field of macroeconomics. For instance, controlling interest rates, taxation, and government expenditure to ensure the stability and growth of an economy. This encompasses the local, governmental, and international economies. Macroeconomics is the branch of economics that studies entire economies. It is concerned with large-scale or general economic issues and how such elements interact with one another throughout economies. Economic outputs, unemployment rates, and inflation are a few examples of macroeconomic factors. Governments, businesses, and customers all keep a careful eye on these economic success indicators.Math is a technique used by economists to explore and manipulate economic models. Sometimes it makes sense to convey economic concepts through language; other times, math is more effective.
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What do you call a website or e-mail address that is created to look like it comes
from a legitimate source? Choose the answer.
pharming
spoofing
spyware
none of the above
Answers
Answer:
this would be called spoofing.
Spoofing is called as a website or e-mail address that is created to look like it comes from a legitimate source.
What is legitimate source?
Legitimate source is defined as according to the law, something that is legal is acceptable.
It can also be defined as the electoral register is a genuine source of information that is currently available to the public.
A reputable source is defined as the one that has been written by an expert in their field and is free of errors and bias.
A trustworthy source is defined as the one that offers a detailed, well-reasoned idea, argument, or discussion based on solid evidence.
Thus, spoofing is called as a website or e-mail address that is created to look like it comes from a legitimate source.
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Suppose a lite insurance company selis a $200,000 1-year lecms iffe insurance policy to a 20yoat-old female for $230. According to the Nabional Vial Statistics Report. 58(21) the probablity that the female survives the year is 0999544 Compute and interpret the expected value of this pollcy to the insurance company The expected valje is s (Round to the nearest cent as needed) Which of the folowing interpretations of the expected valise is correct? Select the correct choice below and fir in the answer box to complete your choice (Round to the nearest cent as needed) A. The insurance company expects to make a maximum profit of 5 on every 20 -year-old fermale it insures for 1 year. B. The insurance company expects to make a profit of : on every 20-year-old female it insures for 1 month C. The irsurance company expecis to make a minimum proft of A on every 20 -year-old female it insures for 1 month D. The insurance compary empecta ta make a profit of 3 on every 20 -yeat-old female it inscires for 1 year
Answers
The expected value of this policy to the insurance company is $229.95. The correct interpretation of the expected value is "The insurance company expects to make a minimum profit of $229.95 on every 20-year-old female it insures for 1 year." Therefore, the correct option is C.
Expected value of this policy to the insurance company can be computed as follows:
Expected Value = (Probability of Survival * Amount Paid by the Policy Holder) - (Probability of Death * Amount Paid to the Policy Holder)
Probability of survival is given as 0.999544 and hence the probability of death is 1 - 0.999544 = 0.000456
Amount paid by the policyholder is given as $230 and amount paid to the policyholder in case of death is $200,000
Expected Value = (0.999544 * $230) - (0.000456 * $200,000)
Expected Value = $229.95
The expected value of this policy to the insurance company is $229.95. The correct interpretation of the expected value is "The insurance company expects to make a minimum profit of $229.95 on every 20-year-old female it insures for 1 year." Therefore, the correct option is C.
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Say a certain service industry has 78. 9 thousand jobs in 2003, but expects to increase at an average annual rate of 2. 65 thousand jobs yearly from 2003 to 2013. If this holds true, what will be this industry’s percent increase from 2003 to 2013? a. 28% b. 30% c. 33% d. 40%.
Answers
Answer:
C. 33%
Explanation:
i just did it
All of the following are assumptions of the resource-based model EXCEPT: a. firms acquire different resources and develop unique capabilities based on how they combine and use resources. b. firms' performances across time are due primarily to their unique resources and capabilities rather than the industry's structural characteristics. c. differences in resources and capabilities are the basis of competitive advantage. d. resources and capabilities are highly mobile across firms.
Answers
Answer: d. resources and capabilities are highly mobile across firms.
Explanation:
Resource-based theory posits that valuable resources which are difficult to copy are valuable to the success of an organization. Such resources can further develop the capabilities of a firm. In the resource-based model, skilled employees are key to the success of the organization.
A why assumption of this model is that the differences in resources and capabilities bring about competitive advantage.
It should be noted that option D "resources and capabilities are highly mobile across firms" ain't an assumption and is therefore the answer.