Firm ABC has a cost of equity of 8%‚ a cost of debt of 5%. It stock is traded at $10/share‚ and has 10 million shares outstanding. Its debt value is $20 million. Tax rate is 40%. What is its after-tax WACC? Equity Value = 10*10=$100 million‚ Debt Value=$20 million So‚ equity weight = 100/120=83.3%‚ debt weight=20/120=16.7% After-tax WACC= equity weight * cost of equity + debt weight * effective cost of debt =83.3%*8%+16.7%*5%*(1-40%) = 7.2% 4. Suppose you are the founder of
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events in Australian history‚ post 1770 Task 1 1. The Great Southern Land (Australia) 2. Give three reasons why it was difficult to look for the “Great Southern Land”. 1) The sea was dangerous 2) The wind did not always blow in the right direction for the sea travel. 3) It was such a long way it was difficult to bring enough food and water. 3. Give four reasons why people wanted to find the “Great Southern Land” (Australia) People could make a lot of money from trade and from getting things at
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Petrie Electronic Week 5 1. Using the guidelines from this chapter and other sources‚ evaluate the usability of the page design depicted in PE Figure 8-1. a. The words should all be in the same language. Some is in English some is in a different language. b. They have a click to act method c. It has limited capabilities to help most Web browsers to support finely grained user interactivity. 2. Chapter 8 encourages the design of a help system early in the design of the human
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briefly describe the three basic questions addressed by a financial manager. What should be the goal of the financial manager of a corporation? Why? What advantages does the corporate form of organization have over sole proprietorships or partnerships? If the corporate form of business organization has so many advantages over the sole proprietorship‚ why is it so common for small businesses to initially be formed as sole proprietorships? The three areas are: 1. Capital budgeting: The financial
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= .13 Long-term debt weight = 1/1.15 = .87 Since the accounts payable has the same cost as the overall WACC‚ we can write the equation for the WACC as: WACC = (1/1.8)(.14) + (0.8/1.8)[(.15/1.15)WACC + (1/1.15)(.08)(1 – .35)] Solving for WACC‚ we find: WACC = .0778 + .4444[(.15/1.15)WACC + .0452] WACC = .0778 + (.05797)WACC + .0201 (.9420)WACC = .0979 WACC = .1039‚ or 10.39% We will use basically the same equation to calculate the weighted average flotation cost‚ except we will use the flotation
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price $40 Market value of firm $400‚000 Number of shares 10‚000 Earnings per share $4 Book net worth $500‚000 Return on investment 8% Pisa has not performed spectacularly to date. However‚ it wishes to issue new shares to obtain $80‚000 to finance expansion into a promising market. Pisa’s financial advisers think a stock issue is a poor choice because‚ among other reasons‚ “sale of stock at a price below book value per share can only depress the stock price and decrease shareholders’ wealth
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Why is confrontation so difficult? The need for confrontation typically derives from a person exhibiting incongruent verbal and nonverbal communication. That is‚ drawing out inconsistencies a person displays is usually uncomfortable: Especially for a new counselor. But why the need for confrontation in the first place? Where and why did these incongruencies originate? The reasons will vary from person to person‚ but I feel a generic‚ universal reason is not wanting to deal with a situation that
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Making sustainability profitable There is a clear aim of this article ‚which is showing to the readers that if we increase sustainability of a company‚ no matter if it is or without the intention of contributing to a better environment‚ could be somehow combined with increasing the bottom line of a company. In the article there were given six examples of companies that contributed to the environment while increasing their finances. The authors mainly focused on the fact that when increasing sustainability
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1. Tom believes the company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company? Electronic Timing‚ Inc. (ETI) needs to be careful on how it dispenses the extra cash as a dividend. Issuing the extra cash as a dividend would mean that the shareholders collectively will probably drop by the same amount because of the transfer of wealth from the company to the shareholders individually. Hence‚ the
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Week 5 Assignment: Community Landscape Project (page 1/5) Student: Tony Donnelly Student ID Number: 15505693 Risk Analysis: Introduction: Milestones are indicators that are inserted into a programme at points of strategic activity. These milestones enable us to track specific events so we can identify certain conditions through the course of a project. In the case of our landscape project we have five milestones inserted into our Gantt chart. They are at task 2 Design backyard‚ task
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