Ask Question, Ask an Expert


Ask Financial Accounting Expert

problem1. Which of the following is considered the capital component for purpose of computing the weighted average cost of capital (WACC)?

A) Accruals.

B) Accounts receivables.

C) Preferred stock.

D) Accounts payable.

problem2. The cost of particular source of capital (preferred stock, debt, common stock) is equivalent to the investor's required rate of return after adjusting for the effects of both flotation costs (that is, the commission fee for the issuance of bonds and stocks) and corporate taxes.



problem3. A preferred stock is valued as:

A) Fixed coupon rate bond.

B) Constant growth stock.

C) Perpetuity.

D) Zero coupon stock.

problem4. Which one of the following is a logical assumption concerning capital structure weights?

A) The weights are stable over time.

B) A new bond issue will lessen the weight of firm's preferred stock.

C) The redemption of bond issue will increase the weight of firm's debt.

D) The issuance of additional shares of common stock will not change the weight of preferred stock.

problem5. If D represents debt, P represents preferred and E represents equity, then the capital structure weight of debt is evaluated as:

A) D/E

B) D/ (D+E+P)

C) D/ (D+E)

D) D/ (E+P)

problem6. Assume your company has an equity beta of 0.58 and current risk-free rate is 6.1%. When the anticipated market risk premium is 8.6%, what is your cost of equity capital?

A) 6.1%

B) 11.1%

C) 8.6%

D) 14.7%.

problem7. Bouchard Company's stock sells for $20 per share, its last dividend (D0) was $1.00, and its growth rate is stable 6%. What is its cost of common stock?

A) 11.0%

B) 5.3%

C) 11.3%

D) 11.6%

problem8. When a firm's before-tax cost of debt is 10% and the firm has 30% marginal tax rate, what’s the firm's after-tax cost of debt?

A) 7.0%

B) 10.0%

C) 3.0%

D) None of above is correct.

problem9.  A company has preferred stock which can be sold for $50 per share. The preferred stock pays an annual dividend $5. Thus, the cost of preferred stock is:

A) 5.67%

B) 6.00%

C) 10.0%

D) 9.43%

problem10. MS Energy has target capital structure of 30% debt, 60% common equity10, and % preferred stock. The company's after-tax cost of debt is 5%, its cost of preferred stock is 8%, and its cost of retained earnings is 12%. What is company's weighted average cost of capital when retained earnings are used to fund common equity portion?

A) 8.0%

B) 10.20%

C) 9.50%

D) 12.80%.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M94182

Have any Question? 

Related Questions in Financial Accounting

Financial accounting assignmentprepare a 4 pages analytical

Financial Accounting Assignment Prepare a 4 pages analytical summary on ATT and Verizon Prepare two full pages for each part, four pages in total. Work Must be original, will be submitted in Turn It In. Label pages separ ...

1 in reviewing a claim under the equal pay act do the

1. In reviewing a claim under the Equal Pay Act, do the courts require that the jobs in question be identical? 2. Why do health professionals view marketing in a different way than their counterparts in other industries? ...

Robert wondered why he was always so stressed out when he

Robert wondered why he was always so stressed out when he was dealing with Lucas, the latest addition to his team. On the face of it, the new hire seemed very agreeable and supportive, but whatever interactions he had ha ...

1 at what position levels of employees is ethics an

1. At what position levels of employees is ethics an important part of decision making in a company? 2. The Foreign Corrupt Practices Act outlaws what type of business practices and how? 3. Conduct a Porter’s 5 forces an ...

Effective-interest versus straight-line bond amortization

(Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2013, Phantom Company acquires $200,000 of Spiderman Products, Inc. 9% bonds at a price of $185,589 The interest is payable each December 31, and ...

Assignmentsqueezed by rising costs a confectioner struggles

Assignment Squeezed by Rising Costs, a Confectioner Struggles to Cope Telford James and his wife Ivey are the second-generation owners of James Confectioners, a family-owned manufacturer of premium chocolates that was st ...

Pick a firm that you are most familiar with and run the

Pick a firm that you are most familiar with and run THE COMPETITIVE PROFILE MATRIX (CPM) analysis. Please share your findings in this forum so we all can learn about your firm’s strengths and weaknesses. Please don't giv ...

Assignment exxon versus chevronaccording to the textbook

Assignment: Exxon versus Chevron According to the textbook, the income statement measures the success of a company's operations for a given period. The income statement is important to investors and creditors, because it ...

James investor corporation acquires 25 of the common shares

James (investor) Corporation acquires 25% of the common shares of Heck (investee) Company for $350,000 on January 1, 2014. For 2014, Heck reports net income of $50,000 and paid dividends of $16,000. Instructions (a) Prep ...

Accounting for managersdirections be sure to make an

Accounting for Managers Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Financial Statement Analysis The following information relates to Harris Corpora ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro