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Verizon Corporation has 55% equity and 45% debt (market values) in its capital structure. The pretax cost of debt is 7%, and that of equity 12%. The total value of the company is $75 billion and its income tax rate is 35%. Verizon has to raise $4 billion in new capital, which will make the EBIT of the company to be $4 billion, with a standard deviation of $2 billion. The company has decided to raise the new capital half with debt and half with equity at the existing rates. Calculate Verizon's new WACC, and the probability that its interest coverage ratio will be less than one.
Answer: 8.629%, 22.70%
Prepare the journal entries required to record the following transactions of a nongovernment, not-for-profit organization. 1. Unrestricted cash contributions received durin
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During its financial year ended 30 June 20x7 Beavers Ltd, an engineering company, has worked on several contracts. Information relating to one of them is given below.
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Refer to Note 8, Securitization Transactions (pp. 78-80) and an extract from Note 2, Additional Balance Sheet and Cash Flow Information (p. 72-73) from the Consolidated Financial S
how does the concept of consistency aid in the analysis of financial system?
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