The White Corporation has a capital structure of 60 percent common equity, 10 percent preferred stock, and 30 percent debt. This capital structure is believed to be optimal. To finance expansion plans over the coming year, the firm expects to have $40 million in retained earnings available. The cost of retained earnings is 18 percent. Additional common equity can be obtained by selling new common stock at a cost of 19.6 percent. Preferred stock can be sold at a cost of 15 percent. $25 million in secured bonds can be sold at a pretax cost of 14 percent. Beyond $25 million, the firm would have to sell unsecured bonds (debentures) at a pretax cost of 15 percent. The firm's tax rate is 21 percent
1. What is the firm's lowest weighted cost of capital?
a. 14.82%
b. 16.50%
c. 11.94%
d. 15.78%
e. 15.0%
2. What is the firm's highest weighted cost of capital?
a. 14.82%
b. 17.76%
c. 16.5%
d. 15.96%
e. 16.5%
Answers: 1
Business, 21.06.2019 19:30
Henry crouch's law office has traditionally ordered ink refills 7070 units at a time. the firm estimates that carrying cost is 4545% of the $1212 unit cost and that annual demand is about 245245 units per year. the assumptions of the basic eoq model are thought to apply. for what value of ordering cost would its action be optimal? a) for what value of ordering cost would its action be optimal? its action would be optimal given an ordering cost of $nothing per order (round your response to two decimal place
Answers: 3
Business, 22.06.2019 04:10
Oakmont company has an opportunity to manufacture and sell a new product for a four-year period. the company’s discount rate is 18%. after careful study, oakmont estimated the following costs and revenues for the new product: cost of equipment needed $ 230,000 working capital needed $ 84,000 overhaul of the equipment in year two $ 9,000 salvage value of the equipment in four years $ 12,000 annual revenues and costs: sales revenues $ 400,000 variable expenses $ 195,000 fixed out-of-pocket operating costs $ 85,000 when the project concludes in four years the working capital will be released for investment elsewhere within the company. click here to view exhibit 12b-1 and exhibit 12b-2, to determine the appropriate discount factor(s) using tables.
Answers: 2
Business, 22.06.2019 12:10
The following transactions occur for badger biking company during the month of june: a. provide services to customers on account for $32,000. b. receive cash of $24,000 from customers in (a) above. c. purchase bike equipment by signing a note with the bank for $17,000. d. pay utilities of $3,200 for the current month. analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (decreases to account classifications should be entered as a negative.)
Answers: 1
Business, 22.06.2019 19:30
Each row in a database is a set of unique information called a(n) table. record. object. field.
Answers: 3
The White Corporation has a capital structure of 60 percent common equity, 10 percent preferred stoc...
Computers and Technology, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
History, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30
Mathematics, 24.10.2021 16:30