Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

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.

True

False

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

Business finance assignmenttasks to complete1download and

Business Finance Assignment Tasks to complete: 1. Download and save the Excel file, "Excel_Assignment". The file is located in the Excel Assignment folder. 2. Save the file to your own drive and rename the file with your ...

Asignmentthe regal cycle company manufactures three types

Asignment The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:   Total Dirt Bikes Mountain Bikes Racing Bik ...

Question 1 which of the following results in an increase in

Question 1. Which of the following results in an increase in the investment account using the equity method? Unrealized gain on intercompany inventory transfers for the current year Sale of a portion of the investment du ...

Question 1brisky corporation had net sales of 2400000 and

Question 1 Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2014. Expenses for 2014 were cost of goods sold $1,450,000; administrative expenses $212,000; selling expenses $280,000; an ...

Assignmentbullpreparationfor this problem you will need to

Assignment • Preparation For this problem, you will need to select a publicly traded company. Once you have selected a publicly traded company, obtain Form 10-K for the company for the most current fiscal year. Use the E ...

Short investment horizon suppose you plan to go to graduate

Short investment horizon: Suppose you plan to go to graduate school in two years and you will need money for tuition. Which type of risk would you be most concerned with and why? Long investment horizon: Suppose that a y ...

Outdoor furniture company has inventory balances at the end

Outdoor Furniture Company has inventory balances at the end of August as follows: Materials inventory $21,360 Work-in-Process inventory 15,112 Finished goods inventory 17,120 Job order cost cards for jobs in process at t ...

Module problem-solution assignmentproblem 1brogan inc

Module Problem-Solution Assignment: Problem 1 Brogan, Inc., reports bad debt expense using the allowance method. For tax purposes the direct write-off method is used. At the end of the current year, Brogan has accounts r ...

Journal entriesprepare the journal entries for the

Journal Entries Prepare the journal entries for the following: May 3 - Received cash from clients as advanced payment for services to be provided and recorded as unearned fees $4500 5. Received cash from clients on accou ...

I loss contingencies entries and essayon november 24 2014

I. (Loss Contingencies: Entries and Essay) On November 24, 2014, 26 passengers on Windsor Airlines Flight No. 901 were injured upon landing when the plane skidded off the runway. Personal injury suits for damages totalin ...

  • 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