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Problem 1: Bank of America wants to revise its capital structure to reduce the overall cost below 14%. Currently its capital structure has a mix of 40% debt, 10% preferred stock and 50% equity. The company's marginal tax rate is 35% that helps to reduce its post tax cost of debt to 15%. The outstanding preferred stock pays a dividend of $15 and net sell proceeds from share is $200. The common stock pays the dividend of $10 and is expected to grow at a rate of 5% per year. With a beta of 1.5, the common share price currently is $60. If the going rate is 15% and the risk free rate is 9%, What is Bank of America's WACC? If it is above 14%, advise them on how to revise the capital to reduce the cost.
On Febraury 1, 2015, Hils Company had $ 10,000 pounds of inventory costin g$ 1.50 per pound; the market value per pound was $ 1.95 on this date. Hills enterd into a futures contract to sell the 10,000 pounds of inventory during My 2015 at $ 2.25 per ..
Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. (Round cost per unit to 2 decimal places.)
Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead and compute the standard cost of one unit of product.
Should the accounting rules regarding deferred tax assets be more definitive to prohibit this type of activity or do you feel the vagueness of current standards
SuperMart has operating income (EBIT) of $1,290,149. Its depreciation & amortization expense is $308,489. How much is the company net cash flow
Here the cash flows (dividends) happen to be a constant perpetuity with the first payment taking place today.
Solve for the current cost of capital of CBPG on a weighted average basis
Given the information above, can this lease be treated as a 'Capital Lease?' Justify your answer. Briefly outline what are the possible ways 'synergy'
A debit is not the normal balance for which account listed below? Accounts receivable account. / Service revenue account./ Withdrawal account
Make the year-end adjusting journal entries to account for the anticipated sales returns. Assume that all sales are made on credit and that all accounts
Complete production schedule for March, April, and May. (Enter all values as positive value.) Complete summary of cash payments for March, April, and May.
Describe four measurement bases that may be used to measure assets. What factors should an organisation consider when choosing an appropriate measurement
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