Dani Corporation ha 7 million hare of common tock outtanding. The current hare price i $73, and the book value per hare i $8. The company alo ha two bond iue outtanding. The firt bond iue ha a face value of $90 million, ha a coupon rate of 6 percent, and ell for 98 percent of par. The econd iue ha a face value of $75 million, ha a coupon rate of 5 percent, and ell for 110 percent of par. The firt iue mature in 22 year, the econd in 7 year. Suppoe the mot recent dividend wa $4. 45 and the dividend growth rate i 4. 8 percent. Aume that the overall cot of debt i the weighted average of that implied by the two outtanding debt iue. Both bond make emiannual payment. The tax rate i 24 percent. What i the company’ WACC?

Answers

Answer 1

If the tax rate i 24 percent, the company’ WACC is 0.2504.

Equity is the amount of money that a company's proprietor has put into it or owns. On a enterprise's balance sheet, the distinction between its liabilities and assets suggests how a great deal fairness the corporation has. the proportion charge or a price set via valuation professionals or investors is used to discern out the equity fee.

Book value weight

Particulars                                amount [millions ]              (amount/total)

common stock                                 $56.00                            0.2534

first issue                                           $90.00                           0.4072

second issue                                      $75.00                           0.3394

Total Book value                               $221.00

Weight of equity on book value basis = 0.2534

Weight of debt on book value basis = 0.7466

                                       Market  value                               weight

Particulars                 amount [millions ]                          (amount/total)

common stock           $511.00                                          0.7496

first issue                    $88.20                                           0.1294

second issue              $82.50                                           0.1210

Total market value      $681.70

Weight of equity on market value basis = 0.7496

 Weight of debt on market value basis = 0.2504

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Related Questions

as baby boomers keep retiring in coming years, it is likely that fiscal imbalance will please choose the correct answer from the following choices, and then select the submit answer button. answer choices lessen. not be affected. first worsen and then lessen. worsen.

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As baby boomers keep retiring in the coming years, it is likely that fiscal imbalance will worsen.

To grow to be or make something worsen than it changed into before synonyms go to pot The political scenario is progressively worsening. Her health has worsened appreciably for reason that we ultimately noticed her. get worse some thing workforce shortages had been worsened by means of the flu epidemic.

Even though it could appear a logical step to move from 'worse' to 'worse', the Oxford English Dictionary does now not list 'worse' as a present-day English word. The Collins English Dictionary defines 'worse' as an archaic or nonstandard word for 'worse'.

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which of the following does not affect the amount of the earned income credit? version 1 11 a) filing status b) amount of credit taken in previous years c) number of qualifying children d) taxpayer's agi

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Among the following given options that will not affect the amount of the earned income tax credit (etic) would be amount of previous years credit already taken. Option B is correct.

What is Earned Income tax Credit?

'A scheme of a tax avoidance incidence in the form of earned income tax credit, a government program that boosts the salaries of low-wage workers.

In economics, tax incidence, also known as tax burden, is the impact of a certain tax on how wealth is distributed. Economists make a distinction between the entity that first receives the tax and the one that ultimately bears the tax burden.

The earned income tax credit (EITC) also refer as the earned income credit (EIC), was created to supplement low-income workers' incomes and lessen the impact of Social Security levies in form of "work bonus plan,"

Thus old credit in previous year would not affect the EIC of current year.

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if a contract for the sale of goods does not cover or mention these items, what does the ucc presume for that item:

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"All objects" that are transportable at the moment of identification to the sale contract, including "specially produced commodities."

What three categories does the UCC use to group things that can be purchased or sold?

Simple delivery contracts, common carrier delivery contracts, goods-in-bailment contracts, and conditional sales contracts are the four types of sales contracts that are permitted by the UCC. Which factor is dominant determines whether a sale or service is made. In a sales contract, consideration is typically expressed in terms of money or money's worth, or price. It could be paid for with cash, commodities, or services. Although a sales contract typically has just express conditions, there may be certain implicit clauses. A contract can be concluded if both parties agree to forego discussing pricing. When there has been no mention of pricing or when the parties have failed to reach agreement on a price

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harvey has a rubbery, smooth, round mass on his chest that is compressible and has a soft-to-very-firm texture. what do you diagnose this as?

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Harvey has a rubbery, smooth, round mass on his chest that is compressible and has a soft-to-very-firm texture. It will be diagnosed as Lipoma.

What is Lipoma?

A lipoma is a fatty mass that develops slowly and is typically found between the muscle layer beneath your skin. With light finger pressure, a lipoma, which feels doughy and is typically not painful, slides easily. Typically, lipomas are discovered around middle age. Some individuals have several lipomas.

A lipoma is often benign and not malignant. Treatment is typically not required, although you might wish to have the lipoma removed if it irritates you, hurts, or is expanding.

Rarely is a lipoma a major medical issue. However, if you spot a bump or swelling anyplace on your body, consult a medical professional.

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why would the physical count of inventory be different than what is shown in perpetual inventory records? (check all that apply.)

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Discrepancies often occur between the physical count and the perpetual records because of clerical errors, theft, waste, misplacement of goods.

Using business software or other technical instruments, such as a point of sale, a perpetual inventory system is a type of inventory control that continually logs in real-time the quantity of inventory bought or sold.

A permanent inventory system would require fast debiting of accounts receivable and crediting of sales in order to update the cost of goods sold or received. The perpetual system of inventory has one advantage over the periodic system of inventory: it ensures that, in the absence of spoilage, theft, etc., the inventory account balance is always accurate. The periodic system of inventory is also impacted by the cost of goods sold.

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which type of management technique allows employees to develop their own career or job development action plan?

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There are three main approaches or theories in leadership research. These are the trait or psychological approach, the situational or incidental approach and, thirdly, the behavioral approach.

Leaders are great not because they have power, but because they have the ability to empower others. That's what level 4 leaders do. They use their position, relationships, and productivity to invest in and grow their followers until they become leaders. Transformational leadership is defined as a leadership approach that brings about change in individuals and social systems. Ideally, you bring valuable positive change to your followers with the ultimate goal of turning them into leaders.

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when a company has a customer that has not paid its account receivable and negotiates that the customer will provide an interest-bearing note in satisfaction of the account receivable, it will?

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When a firm has a customer that has not paid its account receivable and negotiates that the customer will submit an interest-bearing note in payment of the account receivable, then it will receive the interest and the principal amount will be classified as bad debts.

What is an interest-bearing note?

An interest bearing note is defined as a loan from a lender to a recipient or a borrower that bears interest as per the terms of the arrangement with both the parties.

Therefore, In the given case, the company received the interest bearing note by the customer that he will pay the interest amount for the amount that he received from the company, but the principal amount will be called as the bad debts.

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when a plant asset is retired, the difference between original cost and the book value of the asset is

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The identical plant asset is recorded as a loss on disposition of a plant asset on the income statement.

The difference between a fixed asset's acquisition cost and its total historical depreciation is its book value. In the event that the disposal takes place at any time during the year, depreciation must be recorded for the portion of the year leading up to the disposal date. The balance sheet should no longer include that amount. The current book value, which is the asset's initial acquisition price, is taken into consideration during this process.

The amount depreciated throughout the asset's useful life and, if any, the cash received. This usually entails selling long-term assets without getting paid for doing so. When posting an asset with salvage value, you must account for both the asset's accumulated depreciation and the loss of salvage value from retirement. Enter the ledger entry in three lines for a machine with a total cost of $100,000 and a depreciation expense of $80,000.

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when a good is unit elastic, the absolute value of the elasticity is . a.) greater than 10 b.) equal to one c.) greater than one d.) less than one

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A good is unit elastic, the absolute value of the elasticity is equal to one.

Unit elastic call for is known as a call for in which any extrude withinside the rate of an excellent ends in an similarly proportional extrude in amount demanded.  In different words, the unit elastic call for means that the share extrude in amount demanded is precisely similar to the share extrude in rate. Elasticity is a ratio of 1 percent extrude to some other percent extrude—not anything more—and is examine as an absolute value.  In this case, a 1% upward thrust in rate reasons a growth in amount provided of 3.5%.

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Assume capital markets are perfect. Kay Industries currently has $200 million invested in​ short-term Treasury securities paying 8 %, and it pays out the interest payments on these securities as a dividend. The board is considering selling the Treasury securities and paying out the proceeds as a​ one-time dividend payment. Assume investors pay a 15 % tax on dividends and capital​ gains, and a 40 % tax on interest​ income, while Kay pays a 40% corporate tax rate.

a. If the board went ahead with this​ plan, what would happen to the value of Kay stock upon the announcement of a change in​policy?

b. What would happen to the value of Kay stock on the​ex-dividend date of the​ one-time dividend?

c. Given these price​ reactions, will this decision benefit​investors?

Answers

a) The increase in Kay's equity value would be 0.15 x 200, or $30,000,000.

b) On the tax-dividend rate of the one-time dividend, the value of Kay stock would decline by $200,000,000.

c) Given these price movements, the decision will net investors $30 million in profit.

The tax advantage is the term used to describe the economic benefit that is given to some investments or accounts that are, by law, tax-free, tax-deferred, or tax-reduced. Retirement plans, college savings accounts, medical savings accounts, and government bonds are a few examples of tax-advantaged accounts and investments.

a) Calculation of Tax Advantage:

Tax Disadvantage = [1 - (1 - Corporate Tax Rate) * (1 - Dividend Tax Rate)] / [1 - Tax rate on Interest]

Tax Disadvantage = [1 - (1 - 0.40) * (1 - 0.15)] / [1 - 0.40}

Tax Disadvantage = [1 - (0.60 * 0.85)] / 0.6

Tax Disadvantage = (1 - 0.51) / 0.6 = 0.49 / 0.6 = 1 - 0.85 = 0.15

Therefore, Tax Disadvantage = 0.15.

Kay's equity value would rise by 0.15 * 200 = $30,000,000.

b) It would decrease by $200,000,000. Because tax rates on dividends and capital gains are equal, the effective dividend tax rate is 0.

c) Given these price reactions, this choice will result in a $30 million profit for investors.

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a team where a manager or a leader determines the overall purpose or goal of the team, but team members are at liberty to manage the means by which they meet that goal is called a:

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They meet that goal is  called a global brand team members are at liberty

Brands that are well-known across much of the world are considered global brands. Businesses must take the following actions if they want to develop worldwide brands: Find out which markets are most appealing to your brand overall; In each country you're considering entering, do usage and attitude research.

Due to their expansion in experience and length of time spent in the industry, these worldwide brands frequently vary as to quality and superiority. Numerous businesses, like McDonald's, Coca-Cola, and my other picks, have left their mark on the world and will unquestionably be held in high regard by every industry that has connections to them.

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krysta wants to take piano lessons. she asked a teacher how many new pieces she could expect to learn each month. the teacher gave an estimate of 3. write an equation that shows how the total number of pieces krysta would learn, y, depends on the number of months of piano lessons, x.

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The required equation is y = 3x which represents the total number of pieces Krysta would learn, where x months of piano lessons.

What is the Linear equation?

A linear equation is defined as an equation in which the highest power of the variable is always one.

Krysta wants to learn to play the piano. She inquired with an instructor about the number of new pieces she could anticipate studying each month. The teacher estimated three.

Let y represent the total number of pieces Krysta would learn,

And x represent depends on the number of months of piano lessons,

According to the given situation, we can write the equation would be as:

⇒ y = 3x

Therefore, the required equation is y = 3x which represents the total number of pieces Krysta would learn.

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Which of nerdwallet's safety recommendations do you think is most important for protecting your money when using p2p apps? why?.

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Don't ever give it to anyone else. Additionally, you should never use the same password for multiple websites. Additionally, we advise employing firewalls, antivirus software, and password managers.

Review the policies and procedures for safety before enrolling. To unlock your phone, use a different PIN than the one you use to make transactions. Create a reminder to receive an email or text after each transaction.

Never use P2P with strangers; only with individuals you know. Instead than keeping all of your money inside the app, link an outside, FDIC-insured account.

Using a secured Wi-Fi connection to access your bank's official online or mobile banking application is the safest way to conduct online banking. You may be more susceptible to cyberattacks if you conduct banking over unsecured Wi-Fi or through untrusted or unverified apps.

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the analyst wants to figure out the value of all of the items in the spreadsheet. which formula will calculate the total price of all of the items?

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To calculate the values of all items on spreadsheet in column C, use the SUMPRODUCT function and the range ( C2 : C1)

What is spreadsheet explain?

Using rows and columns of data, a spreadsheet is a type of computer application that can store, display, and change data. One of the most used tools that can be used with personal computers is a spreadsheet. A spreadsheet is typically made to store numerical data and brief text passages.

What makes it a spreadsheet, and why?

Spreadsheets are derived from the word "spread," which refers to a newspaper or magazine article (text or image) that spans two facing pages, extends across the centerfold, and treats the two pages as one large page.

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which of the following is true of virtual expatriates? group of answer choices they expose the family to the culture shock of an overseas move. they are more expensive than traditional expatriates. they have no interactions with the home office. they lack a strong personal relationship with local employees.

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They maintain their families at home while staying in hotels and traveling extensively in the foreign nation to which they have been deputed.

The desired function of expatriation is to make sure that the expatriate is capable of carrying out and achieving global business plans, including the knowledge transfer, coordinating and managing international operations/units, and developing human resources.

The rise of "global nomads" and citizens of third countries, more carefully considered mobility rules, and a developing connection between international mobility and talent management are three of the largest developments in global expatriate management.

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the problem associated with the government reacting to the record harvests by increasing taxes or decreasing spending is:

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The problem associated with the government reacting to the record harvests by increasing taxes or decreasing spending is that Unemployment will increase.

What is Unemployment?

When someone actively seeks job but is unable to do so, this is referred to as being unemployed. One important indicator of the state of the economy is unemployment.

The unemployment rate is the most often used indicator of unemployment. It is computed by dividing the total labor force by the number of jobless people.

Numerous governments provide unemployment insurance to certain unemployed people who meet the criteria.

Governmental organizations gather and make available unemployment data in a number of ways.

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A firm finds that as it adds workers, each worker is adding less and less output to the production process. What must be true about average cost?.

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A company discovers that as it grows its staff, each employee contributes a decreasing amount of output to the manufacturing process. The fact that the average cost is increasing must be true.

The average cost is the cost per unit produced during a production run. It is a projection of the typical expenditures made in the manufacture of a good.

This price may vary depending on how many units are produced. In general, the average cost drops as the number of units produced increases when the manufacturer uses increasing efficiency.

As the firm approaches the theoretical capacity of its production facility, each additional unit is more expensive to produce, yet the average cost starts to increase.

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Jarrah sells office supplies from a store in Sandusky, Ohio. He decides to hire a web developer to create a website for customers with the option to view and purchase office supplies. This example best describes the concept of ________, which is a(n) ________ force.

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The instance best describes the concept of e-commerce, which is a technological force.

What is E-commerce?

E-commerce is the purchasing and selling of products and services, as well as the transfer of payments or data, through an electronic network, most notably the internet.

These transactions might be business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), or consumer-to-business (C2B). In the above situation, the instance best describes e-commerce, which is a technical force.

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Differentiating your product so that it will appeal to additional market segments occurs most often at which stage of the product life cycle?.

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The Maturity stage of the product life cycle is when differentiation for your product to appeal to more market segments occurs most frequently.

What stage of the product life cycle is maturity?

Sales decline during the mature period, a sign that the market has started to become saturated. During this phase of the product life cycle, price also starts to become competitive. The profit margins become slimmer as a result.

What traits define the mature phase?

The primary attribute of the mature stage is that sales volumes are still increasing but more slowly. The growth in sales volume will increase more slowly as the mature gets closer to its finish. Additionally fiercer competition exists for customers and market share.

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