Find weighted average of cost of capital

Assignment Help Accounting Basics
Reference no: EM133079057

Question - The Falso Inc. currently has a bond with 10 years to mature. It pays 10% coupon compounded semi-annually. The current price of the bond is $980. The corporate tax rate is 20%. The Falso Inc.'s common stock has beta of 1.3, the risk-free rate is 3.4% and the required rate of return on the market is 12%. Also blank has 40% debt, and 60% common equity in its capital.

Required -

A. Find after-tax cost of debt.

B. Find the cost of equity.

C. Find weighted average of cost of capital.

Reference no: EM133079057

Questions Cloud

Organizational development technique : If you were asked to lead a change initiative at your current job, which Organizational Development (OD) technique would you use, and why?
Charismatic leadership from transformational leadership : This chapter distinguished charismatic leadership from transformational leadership. Why is charisma commonly related to leadership?
What is the definition of capital rationing : What is the definition of Capital Rationing? Why do companies choose to do capital rationing? What impact can capital rationing have on maximizing profits
Organization strategic plan : Determine the HRM's role in the performance management process and explain how to ensure the process aligns with the organization's strategic plan.
Find weighted average of cost of capital : The Falso Inc. currently has a bond with 10 years to mature. It pays 10% coupon compounded semi-annually. Find weighted average of cost of capital
How much dividend income will he receive on June : If Spark purchased 300 shares of this stock on Monday, May 13. How much dividend income will he receive on June 2 from the company
What are economies of scale and diseconomies of scale : What are economies of scale and diseconomies of scale? What factors cause these economies or diseconomies.
Align operational needs with business strategies : ???????What leadership theories have you seen used in your own workplace? Which were most effective? Which were the least effective? Why?
Describe one intercultural communication skill or activity : Write a short self-reflection essay that analyses your personal communication experiences within the business context

Reviews

Write a Review

Accounting Basics Questions & Answers

  Percent of sales method of accounting

The Connecting company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transaction occurred:

  Prepare the required adjusting entries at July

Of the $7,000 rent paid to United Corporation in advance, $6,000 has not yet been earned. Prepare the required adjusting entries at July 31, 2014

  What would kutty industriess cost of goods sold had been if

1.odaine also disclosed that bad debt expense was 1200 in 2012 and 990 in 2011. there were no recoveries of

  Prepare the tax related journal entry

In 2015 tetra Corp. generated $583,000 in revenues and incurs $276,000 in expenses. There an- no permanent or temporary book-tax differences.

  What is the proper adjusted cash balance per bank

Jim Parkus is unable to reconcile the bank balance at January 31. Jim's reconciliation is shown here. What is the proper adjusted cash balance per bank

  What is the carrying amount of the investment in equity

In the December 31, 2016, statement of financial position, what is the carrying amount of the investment in equity securities

  What was mary janane beginning capital balance

Mary Janane's capital statement reveals that her drawings during the year were $50,000. What was Mary Janane's beginning capital balance

  What different types of dividends that a company can pay out

What are the different types of dividends that a company can pay out? Which type would you prefer? Explain why. When should a company pay dividends?

  Prepare the journal entry for this sale, assuming

On January 1, 2009 Snow Corporation purchased 20% of the 200,000 outstanding shares of common stock of Garvey Company for $4.00 per share as a long term investment.

  Discuss the difference between a subsequent event

Discuss the difference between a subsequent event and a subsequent discovery of facts, and determine the auditor's responsibility

  Weaver companys predetermined overhead rate is 1800 per

weaver companys predetermined overhead rate is 18.00 per direct labor-hour and its direct labor wage rate is 12.00 per

  Give the entries to reflect the transactions

In 2018, Merritt incurred actual warranty costs relative to 2017 computer sales of $12,400, Give the entries to reflect the transactions

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd