Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 25%, rd = 6%, rps = 7.7%, and rs = 14%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places
Answers
Shi Import-Export's weighted average cost of capital (WACC) is a financial metric that represents the average rate of return required by the company's investors.
By considering the target capital structure and the associated costs of debt, preferred stock, and common equity, the WACC can be calculated. In this case, Shi's WACC is determined to be a specific percentage, rounded to two decimal places.
To calculate Shi Import-Export's weighted average cost of capital (WACC), we need to consider the target capital structure and the associated costs of debt, preferred stock, and common equity.
Given:
Debt: $300 million
Preferred stock: $50 million
Total common equity: $250 million
Tax rate: 25%
Cost of debt (rd): 6%
Cost of preferred stock (rps): 7.7%
Cost of common equity (rs): 14%
Target capital structure:
Debt: 30%
Preferred stock: 5%
Common stock: 65%
Step 1: Calculate the weights of each component:
Weight of debt (wd) = Debt / (Debt + Preferred stock + Common equity)
wd = $300 million / ($300 million + $50 million + $250 million) = 0.5
Weight of preferred stock (wps) = Preferred stock / (Debt + Preferred stock + Common equity)
wps = $50 million / ($300 million + $50 million + $250 million) = 0.1
Weight of common equity (wcs) = Common equity / (Debt + Preferred stock + Common equity)
wcs = $250 million / ($300 million + $50 million + $250 million) = 0.4
Step 2: Calculate the cost of each component:
Cost of debt (rd) = 6%
Cost of preferred stock (rps) = 7.7%
Cost of common equity (rs) = 14%
Step 3: Calculate the WACC:
WACC = (wd * rd) + (wps * rps) + (wcs * rs)
WACC = (0.5 * 0.06) + (0.1 * 0.077) + (0.4 * 0.14)
WACC = 0.03 + 0.0077 + 0.056
WACC = 0.0937 or 9.37%
Therefore, Shi Import-Export's weighted average cost of capital (WACC) is 9.37%, rounded to two decimal places. This indicates the required average rate of return that Shi needs to generate to satisfy its investors based on its target capital structure and associated costs of capital.
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Related Questions
the most appropriate beginning to a proposal, in general, is a statement that
Answers
The most appropriate beginning to proposal, in general, is statement that identifies writer's purpose and reader's needs.
What is a business proposal?A business proposal is an offer in writing made by a seller to a potential sponsor. Business proposals are frequently an important phase in the intricate sales process, that is, whenever a buyer takes other factors into account in making a purchase. It is said that someone is making a proposal when they make clear to another person that they are willing to act or refrain from doing in order to get the other person's approval. An offer informs the customer about the seller's ability to meet their demands while placing the buyer's requirements in a context that benefits the seller's goods and services. RFPs give comprehensive descriptions of the goods and services the customer wants to purchase. They may also include instructions for putting together a proposal as well as the standards the customer will use to assess proposals.
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There will be a higher equilibrium price and quantity if _____.
a. demand increases and supply stays the same
b. supply increases and demand decreases
c. supply increases and demand stays the same
d. supply increases and demand increases
TIMEDDDD HURRY PLEASEE
Answers
Answer:
I think the answer would be D
Explanation:
Downs, Frey, and Vick formed the DFV general partnership to act as manufacturers' representatives. The partners agreed Downs would receive 40% of any partnership profits and Frey and Vick would each receive 30% of such profits. It was also agreed that the partnership would not terminate for five years. After the fourth year, the partners agreed to terminate the partnership. At that time, the partners' capital accounts were as follows: Downs, $20,000; Frey, $15,000; and Vick, $10,000. There also were undistributed losses of $30,000. If Frey died before the partnership terminated ______________.
Answers
Answer: the partnership would automatically dissolve.
Explanation:
A partnership is referred to as an arrangement that occurs when two or more people come together and join the resources that they've together to form a business and share the profits that they make.
Since the partners agreed to terminate the partnership after the fourth year, if Frey died before the partnership terminated, the partnership would automatically dissolve.
We should note that some of the reasons why a general partnerships will dissolve include:
• Withdrawal of a partner
• Death of a partner
• Bankruptcy
Since Frey is dead, the partnership will be dissolved.
suppose that model nails, incorporated's capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 10 percent. if the appropriate weighted average tax rate is 21 percent, what will be model nails' wacc?
Answers
To calculate Model Nails' weighted average cost of capital (WACC), we need to combine the cost of equity and the cost of debt after adjusting for taxes. We use the following formula:
WACC = (E/V) x Re + (D/V) x Rd x (1 - T)
Where:
E = market value of equity
V = total market value of the firm (E + D)
D = market value of debt
Re = cost of equity
Rd = cost of debt
T = weighted average tax rate
Given that Model Nails' capital structure is 60% equity and 40% debt, we can calculate the market value of equity and debt as follows:
Market value of equity = 0.60 x V
Market value of debt = 0.40 x V
We are also given that the before-tax cost of debt is 6%, the cost of equity is 10%, and the weighted average tax rate is 21%.
Using the formula above, we can calculate Model Nails' WACC as follows:
WACC = (0.60 x 0.10) + (0.40 x 0.06 x (1 - 0.21))
WACC = 0.06 + 0.03
WACC = 0.09 or 9%
Therefore, Model Nails' WACC is 9%.
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a company chooses to price its products by value-based pricing. in order for this type of pricing to be most effective, what additional tactics should be included with the price?
Answers
The additional tactics to be included is use of value-based price in conjunction with all elements of the marketing mix communicating value to the customer
Basically, a value-based pricing is a prices fixing strategy based on consumers perceived value of the product in the market
This type of pricing strategy maintains a certain price level to prevent customers from looking out for competitors product.Hence, the additional tactics to be included is elements of the marketing mix communicating value to the customerIn conclusion, the Option B is correct.
The missing option includes "a.) employ a general market approach to pricing which considers what the market as a whole sees as valuable in a product or service b.) use a value-based price in conjunction with all elements of the marketing mix communicating value to the customer c.) offer a middle price point with the established price and tout the singularity of the product’s value"
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When a shortage of a commodity occurs, we would expect to find that
Answers
When a shortage of a commodity occurs, we would expect to find that the price of the commodity is less than equilibrium price.
What is a shortage?A shortage occurs when the quantity demanded exceeds the quantity supplied. At this point, he price of the commodity is less than equilibrium price. For equilibrium price to be restored, the price of the commodity would rise until equilibrium is restored.
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an employee can be dismissed if their job surplus to requirements' outline why this state ment is false
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Why is account management important in the vegetable farming ? give reason .
Answers
Answer:
Money
Explanation:
The expected result of farming would be to make money, account management would help the most in making money. With account management, you can see how well your farm is producing money which in turn can tell you if you are growing quality crops or a crop that your clients want the most.
Answer:
It is important to appreciate the fact that modern business management principles can assist the farmer or farm manager, no matter how small his farm may be and however meager his capital. This is because of the two major tasks facing today’s farm managers.
Explanation:
Importance of agriculture in the Food supply Agriculture is the world’s leading source of food items. All the food substances that are essential viz. Agriculture produces vegetables, proteins, and oils. The carbohydrates provide all living beings with energy.
What can a boosted post help an advertiser achieve?
Answers
A boosted post helps an adviser to connect with the audience and gain trust.
Boosted post is a kind of post that is used on social media platforms in order to enhance the page of the platform and to attract audience to the page. Boosted post can help better communication with the audience along with the increase in a greater number of messages, calls and texts. Boosted posts help for better advertisements of the product. For example, A Chocolate brand may use Boosted posts to gain audience as well as consumers. Boosted posts helps an adviser to be discovered among people, to establish a benchmark in the market and to gain more and more customers. It's a kind of marketing strategy used for publicity purpose.
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Describe the type of society in which there would be a high demand for a wide variety of products.
Answers
Answer:
They work together to regulate supply, Demand, and prices.
Explanation:
i got it right ;)
Answer: The correct answer is:
A society with a modern economy drives the supply and demand for products based on the production, distribution, and consumption of various goods and services. Demand for commodities (physical products) within the economy drives product price and availability. Some farm commodities require a food distribution system to deliver products from local or remote farms to the markets and consumers. In a society where the economy is healthy and thriving, the demand for goods and services would be higher for popular products, which would also drive up the prices.
Explanation: This answer has been confirmed correct.
The emphasis of the Second New Deal was on a.economic recovery, creating government programs to address the immediate needs of the unemployed. b.protecting the rights of businesses, especially small businesses. c.economic security, in an effort to protect Americans against poverty and unemployment. d.civil rights for African-Americans.
Answers
The correct answer is A) economic recovery, creating government programs to address the immediate needs of the unemployed.
The emphasis of the Second New Deal was on economic recovery, creating government programs to address the immediate needs of the unemployed.
The Second New Deal included new programs to extend federal aid and stimulate the nation's economy, such as the Rural Electrification Administration.
In the decade of 1930s, rural America had no electricity and clear water. The Rural Electrification Administration hired Lester Beall, a graphic designer that created a series of posters describing the benefits of electrification for the communities.
Another example is President Roosevelt’s works progress administration of 1935 that considered many infrastructure programs for the benefit of the U.S. citizens. He also considered the Federal Project Number One. This was a program aimed to help writers, musicians, and artists. Roosevelt aimed to get jobs for these people in order to entertain the American citizens during those difficult times.
Which of the following accounts would normally have a credit balance and appear in the balance sheet?
A. Dividends.
B. Salary expense.
C. Revenue.
D. Uneamed revenue.
E. Accounts receivable.
Answers
The account that contains a normal credit balance & the same appears in the balance sheet is unearned revenue.
The following information is relevant:
The dividend contains the normal debit balance and the same is to be shown under the stockholder equity statement.The salary expense is to be shown under the income statement and contains a normal debit balance.The revenue is to be shown under the income statement & contains a normal credit balance.Unearned revenue is a liability account and contains a normal credit balance. Also, it is to be shown under the balance sheet.The account receivable is an asset account & it contains a normal debit balance. Also, it is to be shown under the balance sheet.Therefore we can conclude that the account that contains a normal credit balance & the same appears in the balance sheet is unearned revenue.
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which microbes is used to extract ethanol from fruit juice and sugar molasses ·
Answers
Answer:
Yeast
Explanation:
A microbe (microorganism) is a microscopic organism which either exist in its single-celled form or as colony of cells. Example of microbes are bacteria, archaea, algae, protozoa.
Yeast is a microbe used in the extraction of ethanol from fruit juices and sugar molasses. Saccharomyces cerevisiae is a specie of yeast which reacts with fruit juices and sugar molasses in the absence of Oxygen to produce ethanol and carbon dioxide.
After performing a bank reconciliation, we need to journalize ________.A. all items on the book side of the reconciliationB. to guarantee that a company will not go bankruptC. promote operational efficiencyD. is established to pay for minor purchases.
Answers
After performing a bank reconciliation, we need to journalize to guarantee that a company will not go bankrupt.
What is bank reconciliation?A bank reconciliation is the process of comparing the balances for a cash account in the accounting records of a company to the equivalent data on a bank statement. Finding the discrepancies between the two is the aim of this procedure, and any necessary alterations will be recorded in the accounting records. Bank reconciliations are a crucial internal control tool that are required for avoiding and identifying fraud. By explaining the discrepancies between the cash balances in the accounting record and the bank balance position as stated in the bank statement, they also assist in identifying accounting and banking problems.
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A customer has a total purchase of $84.75. She hands the person at the
register four $20 bills, three $1 bills, six quarters, one dime, one nickel, and
five pennies. Which of the following is true?
Answers
Answer: The Customer Still owes 0.05
Explanation:
The customer owed $0.05 because She hands the person at the register four $20 bills, three $1 bills, six quarters, one dime, one nickel, and five pennies.
What does purchase cost mean?The total Purchase Price is the total sum that the buyer is required to pay for the goods or services under the terms of the purchase agreement, excluding any taxes, fees for administration, and financing costs.
The term "buy cost" refers to the complete cost of the good or service, including any applicable taxes, shipping charges, additional fees, and contingencies.
Given,
Purchase cost = $84.75
Repayment of cost are as follows = 4 * 20 = $80
= 3 * 1 = $3
= 6 * 0.25= $1.5
= 1 * 0.10 = $0.10
= 1 * 0.05 = $0.05
= 5 * 0.01 = $0.05
The total Payment made by the customer is = $84.70
Thus, the customer pays only $84.70 out of $84.75 which is $0.05 short.
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A product's usage is normally distributed with a weekly average demand of 2,000 units and a weekly standard deviation of 125. The product's lead time is 4 weeks. Currently, the reorder point for this product is 8,200. If the company would like to have a service level of 95% for this product then: Group of answer choices
Answers
Answer:
Dependent demand items are typically products for use by the final customer. ... systems initiate a new order when the level of inventory falls to the reorder point. ... average demand of 2,000 units and a weekly standard deviation of 125. ... If the company would like to have a service level of 95% for this product then A)
If the company would like to have a service level of 95% for this product then it must increase its safety stock by approximately 212 units. Option (d) is correct.
What do you mean by Demand?Demand describes the consumer's desire and willingness to purchase a good or service at a specific time or over an extended period of time. Additionally, consumers must be able to afford the items they want or need based on their budgeted disposable income. Demand therefore has an impact on market expansion and economic growth.
Companies that want to understand consumer demand for a certain product perform demand analysis research. Businesses typically use it to assess their ability to enter the market and make the anticipated profit.
Therefore, Option (d) is correct. It must increase its safety stock by approximately 212 units.
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A product's usage is normally distributed with a weekly average demand of 2,000 units anda weekly standard deviation of 125. The product's lead time is 4 weeks. Currently, the reorder point for this product is 8,200. If the company would like to have a service level of 95% for this
product then;
a. it must decrease its safety stock by approximately 412 units.
b. it must decrease its safety stock by approximately 212 units.
c. it must increase its safety stock by approximately 412 units.
d. it must increase its safety stock by approximately 212 units.
Out of 1000 widgets delivered, 500 broken and they must be resent to you
Mr. Little expects credit for 500 broken pieces and expects an apology and discount for replacement cost. You must create a company name, address, postal code, purchase order number, purchase manager name, phone extension and number, name of the company, phone number, email address. Also, you must create a product part number, discount offers from the accounting division. Expect: proper business structure throughout
Answers
Company Name: Quality Widgets Inc.
Address: 123 Main Street
Postal Code: 12345
Purchase Order Number: PO123456
Purchase Manager: John Smith
Phone Extension: 123
Phone Number: (555) 123-4567
Product Part Number: WID-1000
Discount Offer: 10% discount on replacement cost
Company Name: Quality Widgets Inc.
Phone Number: (555) 123-4567
We apologize for the inconvenience caused by the delivery of 500 broken widgets. At Quality Widgets Inc., we take pride in delivering high-quality products to our valued customers. We understand the importance of meeting your expectations and want to make it right.
Please be assured that we will provide a credit for the 500 broken widgets on your account. Additionally, as a gesture of goodwill, we would like to offer you a 10% discount on the replacement cost of the widgets. This discount will be applied to your next order.
We apologize once again for any inconvenience caused and appreciate your understanding. If you have any further questions or concerns, please don't hesitate to contact our purchase manager, John Smith, at extension 123.
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If lisa and bryce each divides his or her time equally between producing jackets and producing sweaters, then total production is:_________
Answers
If Lisa and Bryce each divide their time equally between producing jackets and producing sweaters, under the production possibilities frontiers, then total production is c) 3 sweaters and 13 jackets.
What are the production possibilities frontiers?The production possibilities frontiers (PPF) use a graphical representation to show the different combinations of the output of two goods that can be produced with available resources and technology.
In the PPF, scarcity, choice, and tradeoffs are captured and factored into the computations.
The PPF operates under some assumptions, including:
Fixed resourcesConstant technologyEfficient use of resources and technology.Thus, if Lisa and Bryce each divide their time equally between producing jackets and producing sweaters, then total production is c) 3 sweaters and 13 jackets.
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Question Completion and Answer Options:a) 6 sweaters and 26 jackets
b) 2 sweaters and 8 jackets
c) 3 sweaters and 13 jackets
d) 5 sweaters and 8 jackets
Graph attached.
why do most people invest in the stock market?
Answers
Because many people invest in stocks simply because the odds are in their favor that over time, the market will go up and earn them money.
Answer:
To make profit
Is there anyway to make money as a teen (Online), I am 14.
Answers
Select two learning styles from the following list. Describe ways in which each of the two learning styles prefer to learn. Bodily/kinesthetic, interpersonal, intrapersonal, logical/mathematical, naturalistic, rhythmic/musical, verbal/linguistic.
Answers
Answer:
interpersonal
positive behaviors used when interacting with others
intrapersonal
relationship with self
Explanation:
I really don't have an explanation sorry
loukas is the ceo of a company that makes laundry detergent. even in this very competitive market, loukas acts with ________ to take actions that benefit the interests of society as well as the organization.
Answers
Loukas acts with social responsibility to take actions that benefit both the interests of society as well as his organization.
It is only acting with social responsibility that balances the interests of society with the interests of the laundry detergent organization.Social responsibility involves checking the resources organizational resources, dealing with social issues, and tackling social problems.Thus, when Loukas acts with social responsibility, it becomes for him to recruit and retain productive employees and achieve profit motives.
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How important is money
Answers
Answer:
very important
Explanation:
money is a global income source for everyone. we all have different types but it is all still money. now say one country got rid of money and had people pay for stuff using other things. if china did that lots of different countries wouldn't be able to get stuff from there unless they had so much of that product they could just give it up.
A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both bonds are priced at 8% nominal yield rate convertible semi-annually and have the same price. In how many years should the new bond mature
Answers
To find the maturity of the bond, we'll use the present value of the bond formula. Both bonds have the same price, so we can set up an equation for the present values of their cash flows:
PV(8% bond) = PV(6% bond)
For the 8% bond with quarterly coupons, the coupon payment is 2% of $1,000, or $20. The cash flow is discounted using an 8% nominal yield rate convertible semi-annually, or 4% per period. Since the bond matures in 9 years, there are 36 quarters.
For the 6% bond with semi-annual coupons, the coupon payment is 3% of $1,200, or $36. The cash flow is discounted using the same yield rate, 4% per period.
Let x be the number of years until the new bond matures.
Now, we can set up the equation:
∑(20 / (1.04^t)) from t=1 to t=36 + (1000 / (1.04^36)) = ∑(36 / (1.04^t)) from t=1 to t=2x + (1200 / (1.04^(2x)))
Solve for x:
x ≈ 8.55 years
The new bond should mature in approximately 8.55 years.
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On December 31, 2019, Cruise Company has 15,000 units of an inventory item, which cost $43 per unit when purchased on June 15, 2019. The selling price was $80 per unit. On December 30, 2019, it was determined that cost to sell was $47 per unit. At what amount should the 15,000 units of Inventory be reported at on the December 31, 2019 balance sheet? Multiple Choice a. $645.000 b. $1.200.000 c. $705.000 d. $495.000
Answers
The cost of goods sold (COGS) per unit can be calculated as follows:
COGS per unit = Cost to purchase + Cost to sell = $43 + $47 = $90
Therefore, the total cost of goods sold for 15,000 units would be:
Total COGS = COGS per unit × Number of units sold = $90 × 15,000 = $1,350,000
The inventory balance at the end of the year can be calculated as follows:
Inventory balance = Number of units on hand × Cost per unit
Since the inventory balance needs to be reported at the lower of cost or net realizable value, we need to compare the cost per unit ($43) with the net realizable value per unit ($80 - $47 = $33).
Since the net realizable value per unit is lower than the cost per unit, we need to use the net realizable value to value the inventory.
Therefore, the inventory balance on the balance sheet date would be:
Inventory balance = Number of units on hand × Net realizable value per unit
= 15,000 × $33
= $495,000
Therefore, the correct answer is (d) $495,000.
Why do you think time is an important aspect of work study
Answers
Discuss the benefits of gaol setting on your career choice
Answers
Goal setting is a powerful tool for anyone looking to advance their career. By setting specific objectives and taking active steps to achieve them, you can increase your motivation, focus, and satisfaction in your work, ultimately helping you to achieve success in your chosen field.
What is goal setting?Generally, Goal setting is an essential process that involves identifying and prioritizing specific objectives that an individual wants to achieve in their personal or professional life. When it comes to career choice, goal setting can offer several benefits, including:
Increased motivation: Setting specific goals for your career can help to boost your motivation and drive towards achieving your objectives. Having a clear target in mind can help you stay focused and energized, even when faced with challenges or setbacks.
Improved focus: By setting specific goals, you can prioritize your efforts and focus on the tasks that are most relevant to achieving your career objectives. This can help to streamline your work and avoid distractions, allowing you to make progress towards your goals more efficiently.
Better decision making: When you have a clear set of goals for your career, you can use them as a framework for making important decisions. This can help you evaluate different opportunities or paths in terms of how they align with your objectives and choose the ones that are most likely to help you achieve your goals.
Enhanced career satisfaction: Achieving your career goals can be a source of great satisfaction and fulfillment. By setting clear objectives for your career and taking active steps to achieve them, you can increase your sense of purpose and fulfillment in your work.
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A company sells a plant asset that originally
cost $528000 for $194000 on December
31, 2017. The accumulated depreciation
account had a balance of $264000 after
the current year's depreciation of $44000
had been recorded. The company should
recognize a
Answers
Answer:
The company should recognize a loss of $70,000
Explanation:
Here in this question, we shall be evaluating what should be recognized in the transaction books of the company as a result of the sales of one of its plant asset.
The first thing to do here is to calculate the book value of the plant asset.
Mathematically, the book value of the plant asset = Original cost of plant asset - Accumulated depreciation value
from the question; the original cost is $528,000
while the depreciation value is $264,000
Thus, the book value of the plant asset = $528,000 - $264,000 = $264,000
Now since the company sold the plant asset at a value of $194,000, which is less than the book value of the plant asset, the company should recognize a loss
The amount of the loss = Amount at which the sold - book value of the plant asset
= 194,000 -264,000 = -70,000
Thus the company should recognize a loss of $70,000
A buying decision made quickly and with little thought is called a(n)
Answers
Answer:
B2C purchase made quickly and with little thought. routine buying decision. Process of communicating with potential customers in an effort to influence their buying behavior.
Explanation:
:)
how do people progress in a business?
Answers
Answer:
with the proper leadership skill and hard work