Answer:
Turnbull’s weighted average cost of capital (WACC) will be higher by 0.64% if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 8.2%, and its cost of preferred stock is 9.3%. If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 12.4%. However, if it is necessary to raise new common equity, it will carry a cost of 14.2%. If its current tax rate is 40%, how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.)
The explanation to the answer is now given as follows:
Step 1: Calculation of WACC when all of its equity capital is raised from retained earnings
This can be calculated using WACC formula as follows:
WACCR = (WS * CE) + (WP * CP) + (WD * CD * (1 - T)) ………………… (1)
Where;
WACCR = Weighted average cost of capital when all of its equity capital is raised from retained earnings = ?
WS = Weight of common equity = 36%, or 0.36
WP = Weight of preferred stock = 6%, or 0.06
WD = Weight of debt = 58%, or 0.58
CE = Cost of equity = 12.4%, or 0.124
CP = Cost of preferred stock = 9.3%, 0.093
CD = Before-tax cost of debt = 8.2%, or 0.082
T = Tax rate = 40%, or 0.40
Substituting the values into equation (1), we have:
WACCR = (0.36 * 0.124) + (0.06 * 0.093) + (0.58 * 0.082 * (1 - 0.40))
WACCR = 0.078756, or 7.8756%
Rounding to 2 decimal places, we have:
WACCR = 7.88%
Step 2: Calculation of WACC if it raises new common equity
This can also be calculated using WACC formula as follows:
WACCE = (WS * CE) + (WP * CP) + (WD * CD * (1 - T)) ………………… (2)
Where;
WACCE = Weighted average cost of capital if it raises new common equity = ?
WS = Weight of common equity = 36%, or 0.36
WP = Weight of preferred stock = 6%, or 0.06
WD = Weight of debt = 58%, or 0.58
CE = Cost of equity = 14.2%, or 0.142 (Note: This is the only thing that has changed compared to what we have in Step 1 above.)
CP = Cost of preferred stock = 9.3%, 0.093
CD = Before-tax cost of debt = 8.2%, or 0.082
T = Tax rate = 40%, or 0.40
Substituting the values into equation (2), we have:
WACCE = (0.36 * 0.142) + (0.06 * 0.093) + (0.58 * 0.082 * (1 - 0.40))
WACCE = 0.085236, or 8.5236%
Rounding to 2 decimal places, we have:
WACCE = 8.52%
Step 3: Caculation of how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.
This can be calculated as follows:
Percentage by which WACC is higher = WACCE - WACCR
Percentage by which WACC is higher = 8.52% - 7.88%
Percentage by which WACC is higher = 0.64%
Therefore, Turnbull’s weighted average cost of capital (WACC) will be higher by 0.64% if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.
The indirect method for the preparation of the operating activities section of the statement of cash flows: Group of answer choices Is required if the company is a merchandiser. Must not be used in all circumstances. Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. Separately lists each major item of operating cash payments. Separately lists each major item of operating cash receipts.
Answer:
Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
Explanation:
FASB is an acronym for Financial Accounting Standards Board. The financial accounting standards board (FASB) is a private, non-profit organization saddled with the responsibility of establishing and maintaining standard financial accounting and reporting for general guidance of individuals such as investors, issuers and auditors. It was founded in 1972 but began operations fully on the 1st of July, 1973 by replacing the Accounting Principles Board (APB) and American Institute of Certified Public Accountants (AICPA).
When the operating activities section of the statement of cash flows is reported using the indirect method, the FASB requires that, you report net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
Hence, the indirect method for the preparation of the operating activities section of the statement of cash flows reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
Some examples of operating activities are cash revenue from the sales of a product, cash paid as an expense for merchandise etc.
Describe THREE different types of warehousing
Answer:
1. Private Warehouses: Owned and managed by manufacturers and only them can store goods in it.
2. Public Warehouses: Managed by the general public and everyone can store goods in it on payment of rent.
3. Government Warehouses: Owned and managed by the government.
Explanation:
We need various kinds of goods in our everyday life. We may get a portion of these things in mass and store them in our home. Additionally, finance managers likewise need an assortment of products for their utilization. Some of them may not be accessible constantly. However, they need those things over time with no break.
The need for storage emerges both for raw material just as completed items. Storage includes legitimate plan for saving merchandise from the hour of their creation or buy till the real use. At the point when this storage is done for a huge scope and in a predefined way it is called 'warehousing'.
(a) How does Alibaba implement competitive pricing strategy in market
Explanation:
Alibaba is a Chinese business group that uses one of its main business strategies to offer a lower price than its competitors.
There are several reasons why Alibaba is able to maintain this strategy competitively, for example, as it is a group of companies with different niches and different suppliers, it is possible to find a variety of them within the group's e-commerce, which makes there are options for price variations and incentive for the consumer to choose. In addition, the price variation remains at a healthy level that does not generate losses for Alibaba.
The group also maintains a strategy of offering discounts to consumers that generate greater purchase motivation, such as discount coupons, gifts, free shipping, etc.
In deciding whether to drop or keep a product line, all of the following are relevant to the decision except: a. Whether dropping the product line today would eliminate future options for growth and expansion. b. Demand interdependencies across product lines of the company. c. The level of unavoidable fixed costs. d. Effect of the decision on overall company morale. e. The segment margin generated by the product line.
Answer:
c. The level of unavoidable fixed costs.
Explanation:
Product line in marketing is considered as a group of different products that are related to each other and often targets to the same thing. They are marketed and created under a single brand and sold by the same company. An example of it is product line hair care like shampoo, hair gel, hair wax, hair oil, etc.
Deciding a product lining is very essential to the organization. The growth and the expansion of the company depends upon the product lining of the future options. Therefore, dropping off a product line or keeping it should be decided properly. It also affects the overall morale of the company.
The relevant margin that is generated by the product line of the company should also be checked before deciding.
Suppose the Federal Reserve (the Fed) announces that it is raising its target interest rate by 50 basis points, or 0.50%. It would achieve this by _____________________: The sequence of events that results in a new equilibrium interest rate, after the Fed makes the change you selected, may be described as follows: Because there is ____________ in the financial system the quantity of money demanded __________.
Answer: decreasing money supply; less; decreases.
Explanation:
When the Federal Reserve wants to increase its target interest rate by 50 basis points, this can be done if the Fed reduces the money supply that is in circulation.
This will in turn, lead to a new equilibrium rate and there will also be a decrease in money in the financial system as there'll be a reduction in the quantity of money demanded.
Sally Clark purchased 500 shares of ABC corporation for $10 per share and oaid a total commission of $200. The current price of the stock is $12 per share. Last year, Sally received dividends of $2 per share
Answer:
38.46%
The question
Based on the information given, compute stock returns.
Explanation:
The percentage return will be
The actual returns/ amount invested x 100
Returns represent gains from the share.
1. The gain in share price
= Current value - original value
=($12 x 500 ) - ($10 x 500)
=$6,000 - $5,000
=$1,000
2. gain from dividends
=$2 x 500
=$1,000
Total gain = $1000 + 1000 = $2000
The amount invested = original value + commissions
=($10 x 500) + $200
=$5200
The percentage gain
= $2000/5200 x 100
=0.384615 x 100
=38.46%
Wildhorse Co. took a physical inventory on December 31 and determined that goods costing $198,500 were on hand. Not included in the physical count were $25,000 of goods purchased from Waterway Industries, FOB, shipping point, and $26,000 of goods sold to Oriole Company for $30,000, FOB destination. Both the Waterway purchase and the Oriole sale were in transit at year-end.What amount should Wildhorse report as its December 31 inventory
Answer:
$249,500
Explanation:
Calculation for the amount that Sheridan should report as its December 31 inventory
Using this formula
December 31 inventory=Goods costing+Goods purchased +Goods sold
December 31 inventory=$198,500+$25,000+$26,000
December 31 inventory=$249,500
Therefore the amount that Sheridan should report as its December 31 inventory will be $249,500
Which of the following arguments are in favor of active stabilization policy by the government? Check all that apply
Answer:
D) Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.
Explanation:
The Federal Reserve (FED) can respond to excessive pessimism among consumers and businesses by expanding the money supply and lowering interest rates. To deal with excessive optimism they can do the opposite, they can shrink the money supply and increase the interest rate.
U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect the Group of answer choices overall balance of payments of the United States. competitive balance of free competition inside the U.S. national security of the United States. competitive balance of world trade. relationship of the U.S. with the world community.
Answer:
national security of the United States
Explanation:
In the case when the U.S firms, their foreign subsidiaries that have taken the license of United states to not sell the products to a country in which the considered thing is sale due to which it impact the united stated national security as these trade could be prevented because of the concern related to the national security
hence, the above is the correct option
Thus, the same is to be considered
Recording Cash Discounts Schrand Corporation purchases materials from a supplier that offers credit terms of 2/15, n/60. It purchased $12,500 of merchandise inventory from that supplier on January 20, 2019. Required a. Assume that Schrand Corporation paid the invoice on February 15, 2019. Prepare journal entries to record the purchase of this inventory and the cash payment to the supplier using the net-of-discount method.
Answer:
Schrand Corporation
Journal Entries:
January 20, 2019:
Debit Inventory $12,500
Credit Accounts Payable $12,250
Credit Purchase Discounts $250
To record the purchase of inventory on credit terms, 2/15, n/60.
February 15,. 2019:
Debit Discount Lost Expense $250
Credit Accounts Payable $250
To record the loss of discount following late payment.
Debit Accounts Payable $12,500
Credit Cash Account $12,500
To record the payment for purchase.
Explanation:
a) Data and Calculations:
Inventory purchase on January 20, 2019 = $12,500
Credit terms = 2/15, n/60
Net-of-discount purchase = $12,250 ($12,500 - 250)
Payment of invoice on February 15, 2019 = $12,500
b) The difference between the net and gross discount methods is that under the gross discount method, the purchases and Accounts Payable are initially recorded at full value. On the other hand, under the net discount method, the purchases and Accounts Payable are initially recorded at a reduced value.
Sheffield Corp. bought a machine on January 1, 2011 for $814000. The machine had an expected life of 20 years and was expected to have a salvage value of $82000. On July 1, 2021, the company reviewed the potential of the machine and determined that its future net cash flows totaled $408000 and its fair value was $273000. If the company does not plan to dispose of it, what should Sheffield record as an impairment loss on July 1, 2021
Answer:
$156,700
Explanation:
Depreciation expense = [Cost-salvage value] /useful life
Depreciation expense = [814000 - 82000]/20
Depreciation expense = $36600
1 January 2011 - 1 July 2021 = 10.5 years . Total depreciation = 10.5 * $36600= 384,300
Book value as on 1 July 2021 = Cost - Accumulated depreciation
Book value as on 1 July 2021 = 814000-384300
Book value as on 1 July 2021 = 429700
Net realizable value = Lower of future cash flow or fair value
Lower of 408000 or 273000
Net realizable value = 273000
Now, since the Book value is more than net realizable value, Asset is impaired
Impairment loss = $273,000 - $429,700
Impairment loss = $156,700
Thus, Sheffield should record $156,700 as an impairment loss on July 1, 2021.
the first step in successfully creating and using a budget is
Answer:
Determine your income. Start with how much money you make after tax each month
Explanation:
i hope this help
Bruno's Lunch Counter is expanding and expects operating cash flows of $28,500 a year for 6 years as a result. This expansion requires $95,800 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $7,000 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 10 percent
Answer:
$25,276
Explanation:
The computation of the net present value is shown below:
The Present value of inflows is
= Cash inflow × Present value of discounting factor (rate% , number of years)
= $28,500 ÷ 1.1 + $28,500 ÷ 1.1^2 + $285,00 ÷ 1.1^3 + $28,500 ÷ 1.1^4 + $28,500 ÷ 1.1^5 + $28,500 ÷ 1.1^6 + $7,000 ÷ 1.1^6
= $128,076.25
And,
Present value of outflows is
= $95,800 + $7,000
= $102,800
So
As we know that
NPV = Present value of inflows - Present value of outflows
= $128,076.25 - $102,800
= $25,276
John (45) and Cynthia (46) are married, and they will file a joint return. During the year, they earned investment income consisting of: $200 interest income from a savings account with their local bank, reported on Form 1099-INT. $350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT. $100 in dividends from a savings account with a local credit union, reported on Form 1099-INT. $250 interest income from a U.S. Treasury note, reported on Form 1099-INT. $500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT. $1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV. Complete John and Cynthia's Schedule B (Form 1040), Interest and Ordinary Dividends.
Answer:
Calculation of Net taxable income
Particulars Amount Amount
Interest income from savings interest $200
Interest income from certificate deposit $350
Dividend from saving account with $100
local credit union
Interest income from us treasury note $250
Tax exempt interest from municipality bond $500
Ordinary dividend $1,700
Gross total income $3,100
Income exempt
Dividend from saving account $100
Dividend from treasury note $250
Tax exempt interest from municipality bond $500 $850
Net taxable income $2,250
Jeff and Riley were married for 35 years when Riley died in July of 2016. The couple have two children who are 6 and 10 years old. Which of the following applies to Jeff regarding filing status?a) Jeff can file using any status he wants for the next 3 yearsb) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 and 2018c) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2016 onlyd) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 only
Answer:
(D) I think
Explanation:
When your husband or spouse dies,you file as a widower. If he has children he could get extra benefits because he can file his kids as a Dependent on his Taxes.
Hope this helps:)!
Stay beautiful ❤️
With Riley having died in 2016, the procedure would be that b) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 and 2018.
Special Qualifying WidowerAllows a widower to still fill taxes jointly as a married person for two years after the spouse dies. Can only apply if there is at least a single dependent child.There are two dependent children in this scenario so Jeff qualifies for this filling status. As Riley died in 2016, Jeff's two years would be the years 2017 and 2018.
In conclusion, option B is correct.
Find out more on the special qualifying widower status at https://brainly.com/question/26021534.
Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $31,500 for medical insurance and contribute an additional $9,650 to a retirement program. Record the entry for these accrued (but unpaid) benefits on December 31.
Answer:
Date Details Debit Credit
December 31, Employee benefits expense $41,150
Medical insurance payable $31,500
Employee Retirement program $9,650
payable
Working
= 31,500 + 9,650
= $41,150
“EBIT is generally considered to be independent of financial leverage, because EBIT is the result of a firm’s operating effectiveness. However, with an excessive debt levels, EBIT might actually be influenced by financial leverage.”
Comment on the statement above.
Answer:
The answer is below
Explanation:
EBIT is known as an accounting measure to determine the profit level of a firm. It is an acronym of Earnings Before Interest and Taxes.
EBIT is generally considered to be independent of financial leverage because EBIT is the result of a firm’s operating effectiveness.
This is true because, EBIT is based on the firm's level of sales and cost of operation, of which financial leverage has no effects on it.
However, with excessive debt levels, EBIT might be influenced by financial leverage.
This implies that even though the financial leverage of a firm has no direct influence on EBIT, in a situation whereby a firm is operating at huge deficits, every aspect of the film will be concerned. This will include staff, customers, investors, and operational activities, thereby affecting the firm's sales and cost of operation. As a result, this will ultimately affect the firm's EBIT.
A company that sends email advertising messages to millions of individuals without their permission violates?
Answer
no it doesn't violate because its and advertisement and millions of businesses do it
Explanation:
Answer:
the CAN-SPAM act
Explanation:
The Army receives proposals from eight different companies in response to a Request for Proposal (RFP). The Contracting Officer has identified the most highly rated proposals, determined the competitive range, and wants to get the offerors' best and final proposals. What type of information exchange would the Contracting Officer use to get the information needed to allow the offerors to revise their proposals
Answer: Negotiation
Explanation:
The contacting officer would use negotiating method to speak to the different companies. By the time he or she is able to communicate by negotiation, there would be results on what's needed for the final phase of the selection
Gallonte Inc. began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm's budgeted collections for May
Answer:
Total cash collection May= $60,000
Explanation:
Giving the following information:
Cash collection:
30% are collected in the month of sale
60% are collected in the first month after sale
10% are collected in the second month after sale.
Sales:
April= $60,000
May= $80,000
We need to calculate the cash collection for May:
Cash collection:
Sales in cash May= (80,000*0.3)= 24,000
Sales in account from April= (60,000*0.6)= 36,000
Total cash collection May= $60,000
Select the correct answer.
Information security professionals hack into computer systems.
A True
B. False
Answer:
true
Explanation:
Answer:
false
Explanation:
Apollo Inc. has an unfunded pension liability of $900 million that must be paid in 30 years. If the annual interest rate is 6% compounded semiannually, what is the present value?
Answer:69420 milliom
Explanation:
Nice
Marie is expected to receive $25,000 at the end of 7 years. If the interest rate is 10% per year, how much is it worth at the end of 10 years?
OKRs were naturally integrated into the management of MyFitnessPal. A successful innovation to the OKR system made by Mike Lee was to match objectives to people rather than match people to objectives.
A. True
B. False
Answer:
A. True
Explanation:
Since in the question it is mentioned that QkR is naturally integrated into the MyFitnessPal management. Also the innovation would become the successful when the objectives are matches according to the people instead matching the people to objectives as in this the people are aligned and understand what the firm wants that they work like this
Therefore the given statement is true
Hasty and Tasty Foodservice received a 120-day, 8% note for $96,000, dated April 9 from a customer on account. Assume 360 days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. $fill in the blank a7f48f054fe7fee_2 c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank.
Answer:
a. Month Days
April 21 (30 -9)
May 31
June 30
July 31
August 7
Total 120 days
Thus, due date of the note is August 7
b. Interest = $2,560 [$96,000 * 8% * (120/360)]
Principal = $96,000
Maturity value $98,560
c. Date Account Titles Debit Credit
Aug 7. Cash $98,560
Note receivables $96,000
Interest revenue $2,560
Factor Weight A B C
Convenience 0.15 85 85 82
Parking facilities 0.20 70 91 91
Display area 0.18 87 97 90
Shopper traffic 0.27 95 90 92
Operating costs 0.10 86 90 97
Neighborhood 0.10 88 92 84
1.00
Using the above factor ratings, calculate the composite score for each location.
Answer and Explanation:
The composite score for each location is as follows;
The Composite score for Location A is
= 85 × 0.15 + 70 × 0.2 + 87 × 0.18 + 0.27 × 95 + 86 × 0.1 + 88 × 0.1
= 85.7
= 86
The Composite score for Location B is
= 85 × 0.15 + 91 × 0.2 + 97 × 0.18 + 90 × 0.27 + 90 × 0.1 + 0.1 ×92
= 90.91
= 91
The Composite score for Location C is
= 82 × 0.15 + 91 × 0.2 + 90 × 0.18 + 92 × 0.27 + 97 × 0.1 + 0.1 ×84
= 89.64
= 90
The total asset market value of General Motors (GM) is $10 billion. GM has an equity market value (market capitalization) of $7 billion of equity. What are the weights in equity and debt that are used for calculating the WACC, respectively
Answer:
0.70,0.30
Explanation:
Calculation for the weights in equity and debt that are used for calculating the WACC respectively
Calculation for weights in equity
Weights in equity= $7 million / $10 million
Weights in equity = 0.70
Therefore the Weights in equity will be 0.70
Calculation for debt
Debt = ($10 million - $7 million) / $10 million
Debt=$3millon/$10 million
Debt= 0.30
Therefore the debt that are used for calculating the WACC will be 0.30
If a large, undiversified oil company used information technology in order to manage organizational coordination, it is likely trying to offset problems with
Answer: diseconomies of scale
Explanation:
Diseconomies of scale is a scenario that occurs when the growth of a particular company brings about an increase in the company's cost per unit. A rise in output in turn, leads to a rise in cost.
Therefore, if a large, undiversified oil company used information technology in order to manage organizational coordination, it is likely trying to offset problems with diseconomies of scale.
"Political risk is the possibility that political events in a particular country will influence the economic well-being of a firm operating in that country. Multinational firms need to anticipate and manage political risk. In order to do that, the firm must understand the differing types of risks and their likelihood of occurrence. The political risks facing a multinational firm can be categorized as"
Answer:
macro risk and micro risk.
Explanation:
Political risks are crucial factors for a multinational company to make investments in a given country, due to the instability of the country's political scenario that can bring negative adverse effects to the company in a context of macro risk and micro risk.
Macro risk is that which is inherent in the country and affects all economic sectors equally, such as the risk of government expropriation.
Micro risk, on the other hand, is one that will impact only a specific business sector, such as corruptions that aim to defraud or harm an organization.
The process for applying for a work permit at the Manchester department of labor is as follows. First, the administrator fills out an application (5 minutes) and takes a picture (1 minute). Then, a clerk enters the information and processes the permit (5 minutes). There are two administrators and three clerks. If the number of licenses per hour for the administrators is 16 and the number of licenses per hour for the clerks is 20.57, what is the hourly service rate for administrators
Answer:
the hourly service rate is 10
Explanation:
The computation of the hourly service rate for the administrator is shown below:
= total minutes for filling out the application by an administrator × number of administrator
= 5 minutes × 2 administrator
= 10
Hence, the hourly service rate is 10
We simply applied the above formula so that the correct value could come
And, the same is to be considered