Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders' preference, the company wants to get rid of all its debt. Before recapitalization, what is the WACC? 13.06% O 10.44% 17% 10% 11.94%
Q: Write the method used to identify whether the interest is compounded annually or at some other…
A: Interest indicates the additional amount to be paid or received in consideration of the principal…
Q: Information from the records of Conundrum Company for September was as follows: Sales $307,500…
A: Product cost includes all the direct and indirect expenses directly concerned with the product like…
Q: Gee Hee Traders started operating in 2021. For the year ended 2021, the sales, purchases, and…
A: Solution We are given with the following information Sales = P500,000 Purchases = P200,000 Closing…
Q: Why has the current 10-yr US Treasury changed from 2.79% in August to 3.51% now? Why is it…
A: The current 10-year US Treasury has changed from 2.79% in August to 3.51% now due to an increase in…
Q: 10) The ABC partnership has the following capital accounts on its books at December 31, 2017: Credit…
A: A partnership is a style of business in which two or more people formally agree to be co-owners,…
Q: A business pays weekly salaries of P200,000 on Friday for a five-day workweek ending on that day. If…
A: All ledgers must be updated on an accrual basis at the end of an accounting period. It entails…
Q: 4. Prepare a cash budget by quarter and in total for next year.
A: Budgeting - Budgeting is the process of estimating future operations based on past performance. %…
Q: Required information [The following information applies to the questions displayed below.] Julio and…
A: The income statement is the financial document that shows the incomes or expenses for the period by…
Q: Santana Rey has consulted with her local banker and is considering financing an expansion of her…
A: A debt-to-equity ratio is a type of ratio that shows the financing pattern of the company based on…
Q: Barley Hopp, Incorporated, manufactures custom-ordered commemorative beer steins. Its standard cost…
A: The variance is the difference between actual and standard production data. The variances are…
Q: capital balances: A, Capital P70,000 B, Capital P90,000 C,…
A: Closing balance of capital = Opening balance of capital + Interest of capital + commission or…
Q: Brooks sells a portion of its trading securities (costing $25,000) for $26,750 cash. Analyze each…
A: Introduction: The debt investment purchased by Brooks shall be treated as financial Asset. The…
Q: You have a lawn mowing business. You plan to work 300 hours per month and charge your customers $23…
A: Anticipated costs are the costs that may have to be incurred in a coming accounting period. The…
Q: Note Your answers may differ from those offered below due to rounding error in all cases, select the…
A: Pariculars Actual units % of completion Equivalent units Completed during the period 4400 100%…
Q: Prominent Sdn Bhd produces furniture at several factories. Its Seberang Prai factory produces office…
A: PARTICULARS MACHINE A MACHINE B A SALE REVENUE OF CHAIR (RM) 96000 96000 ( 800 X RM120 ) ( 800…
Q: A and B (AB partnership) decide to form a partnership. A already has a business in operation and he…
A: The partnership comes into existence when two or more persons agree to do the business and further…
Q: please show how to calculate net investment in capital assets from the statement of net position.…
A: Both the government wide and proprietary fund balance sheets report net position which can be…
Q: Under US GAAP ABC Company has provided the following information related to its investment in…
A: Earnings earned through the change in the fair value of available-for-sales securities should be…
Q: Statement 1: All equity accounts have normal credit balances. Statement 2: The Statement of Changes…
A: Equity accounts include: common stock, preferred stock, additional paid-in capital, retained…
Q: 11. Bolsa Co. estimates that 60,000 special zipper will be used in the manufacture of industrial…
A: CALCULATION OF OPPURTUNITY COST Total amount invested = 60,000 special zipper X P6 per zipper…
Q: Anslo Fabricating, Inc. is authorized to issue 10,000,000 shares of $5 stated value common stock.…
A: ALSO FABRICATING INC…
Q: On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an…
A: Whenever a lessor and lessee enter into a lease agreement lease accounting is done wherein Right of…
Q: Statement 1: Accrued income may be recognized before year-end. Statement 2: Accruals include…
A: Statement 1: Accrued income may be recognised before year end. Accrued income is the income which is…
Q: Claudia is learning about differential analysis in Chapter 25 this week. She made a goal to try and…
A: Answer:- Accountant meaning:- An accountant is a person who generally works in the accounting…
Q: Please answer D, E and F
A: We often use financial ratios to determine the financial health of a company. Financial ratios are…
Q: James Corporation produces products A, B, and C from a single raw material input in a joint…
A: Joint Cost :— It is the cost that are incurred jointly in the manufacturing of one or more joint…
Q: 12. Picnic Items, Inc. manufactures coolers of 10,000 units that contain a freezable ice bag. For an…
A: Relevant cost is the cost which is relevant in decision making . Relevant cost is incurred for…
Q: investments with low return variances usually: a. have a high return standard deviation b. have…
A: d. none of these options SINCE THE INVESTMENTS WITH LOW RETURN VARIANCE HAS LOW STANDARD…
Q: Office supplies were P9,000 at the end of February and P11,600 at the end of March. During March,…
A: ANSWER The equation to calculate cash paid for office supplies expenses during March…
Q: Assuming you have PHP50,000 in excess funds. In which investment vehicle will you put your…
A: IF I CONSIDER OPTION (a) INVESTMENT IN NEWLY LAUNCHED INITIAL PUBLIC OFFERING (IPO) ADVANTAGES…
Q: Maryland Novelties Company produces and sells souvenir products. Monthly income statements for two…
A: Variable Cost :— It is the cost that changes with change in units. Variable cost per unit is…
Q: Craig Hammer purchased a new condominium for $225,000. The bank required a $30,000 down payment.…
A: Total Present Value = $225,000 Down payment = $30,000 Present Value of Loan = $195,000 Annual…
Q: Exercise 10-6 (Algo) Record common stock, preferred stock, and dividend transactions (LO10-2, 10-3,…
A: JOURNAL ENTRIES Journal Entry is the First stage of Process of Accounting. Journal is the Process…
Q: ek 1 Statement Matching Amortization Accounts Payable Cash Receipts Land Net Cash Depreciation…
A: Every organization deals with numerous economic data and transactions in its daily life; like sales,…
Q: Which of the following documents will not be prepared by the seller in a transaction? Invoice Bill…
A: Buyer and Seller - Buyer is a person or an organization which buys goods from the company on credit…
Q: Compute the break-even point in dollar sales for next year assuming the machine is installed.…
A: The contribution margin is calculated as difference between sales and variable costs. The…
Q: Other than 1040, what other forms need to be completed?
A: Schedule A: This is one of the schedules accompanying Form 1040. This schedule is used by filers to…
Q: Barbie and Ken agrees to lend Dora money in exchange of monthly payments of P= P 5,000 begin- ng…
A: Please Note: As per guidelines, only first three sub parts of single problem is to be solved in…
Q: Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It…
A: The official record for the business is a journal that includes every transaction in reverse…
Q: 1. After determining the total product cost of P100.00 per unit, Mr. Abecee the owner, decided to…
A: The question is based on the concept of Cost Accounting. Retail price is calculated by adding the…
Q: X-ray any three(3) revenue allocation principles, clearly explaining the benefits and criticisms of…
A: 1. Per Capita Equalization Principle: This principle stipulates that each state or region should…
Q: Go to the CANSIM database and download monthly data, from January 1976 to January 2021, on the…
A: The moving point of the yield bend is an indication that market members are expecting an improvement…
Q: Lucky Number 13, Inc. ran into some unfortunate luck, having their IT environment hacked by a…
A: The correct answer is C. 0.974000 POUNDS
Q: A $7,000, 4%, 120-day note dated March 20 is discounted on July 15. Assuming a 3% discount rate, the…
A: Answer The value of an notes payable = $7000 + ( $7000 × 4% × 120/360) $7093.33 Total…
Q: Date 2 e Account Debited 17 Wind Sail Co. 18 Bob Glass Co. Terms 1/10, n/30 1/10, n/30 Sales Journal…
A: S.No Acccount Number Dr/Cr Paticulars Debit ($) Credit ($) 147 112 Dr Wind sail co. ( 1360 + GST…
Q: in assets and liabilities, net of acquisitions: ease (increase) in receivables ease (increase) in…
A: When inventory is sold, the cost of inventory is realized and a part of profit is also earned. This…
Q: Required 1 Required 2 Determine the amount by which net income would be misstated if Vito's failed…
A: Every business organization does financial transactions to run the business. Companies should record…
Q: (b) Compute the depreciation expense for the year ended December 31, 2026. Vaughn elected to…
A: Depreciation expense is the reduction in the value of asset due to its use or wear and tear.…
Q: Required information ($ thousands) Net sales Cost of goods sold Current Year $ 885,182 396,513…
A: A trend Percentage, commonly referred to as an "index number," can be used to compare financial data…
Q: ETFs are the most popular investment instruments for individual and institutional investors. You are…
A: My approach to designing bond ETFs that stand out in the crowd would be to focus on creating…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders' preference, the company wants to get rid of all its debt. After recapitalization, what is the cost of equity? 15.04% 19.73% 20.9% 18.47% 21.2%Ma1. Please give only typed answer. Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders' preference, the company wants to get rid of all its debt. Before recapitalization, what is the value of the firm? $25,000,000 $20,000,000 $80,000,000 $30,000,000 $50,000,000Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders' preference, the company wants to get rid of all its debt. After recapitalization, what is the value of the firm? $90,500,000 $50,000,000 $69,500,000 O $80,000,000 $30,000,000
- Hawar International is a shipping firm with a current share price of $5.05 and 10.4 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $9.5 million and repurchasing shares, that Hawar pays a corporate tax rate of 21%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $5.10 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt?BTC has 15M shares in an all-equity firm, at a price of $13 per share. The firm announced that they will borrow $100M to buy back shares (using the full amount of debt). They will keep this debt permanently. Upon announcement the share price increases to $16 per share. The corporate tax rate is 25%, taxes and financial distress costs are the only relevant market imperfections. What is the present value of the financial distress costs?F2. 1. Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders’ preference, the company wants to get rid of all its debt. Answer the below questions a. Before recapitalization, what is the WACC? b. Before recapitalization, what is the value of the firm?
- Hawar International is a shipping firm with a current share price of $4.94 and 9.8 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $8.7 million and repurchasing shares, that Hawar pays a corporate tax rate of 25%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.99 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt? a. If the only imperfection is corporate taxes, what will be the share price after this announcement? The share price after this announcement will be $ per share. (Round to the nearest cent.) b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.99 after this…Barry's Ltd. is all equity financed with 18,000 shares outstanding and each share sells for $22. The EBIT of the company is $50,000. The company is debating of converting into a 40% debt capital structure, with 6% interest per annum. The cost of capital is currently 10%. Ignore taxes. You are required to answer the following: (d) What is the cost of equity in the levered company? (e) What is the cost of capital of the levered company?Le Comp Ltd. is all equity financed with 18,000 shares outstanding and each share sells for $22. The EBIT of the company is $50,000. The company is debating of converting into a 40% debt capital structure, with 6% interest per annum. The cost of capital is currently 10%. Ignore taxes. You are required to answer the following: (d) What is the cost of equity in the levered company? (e) What is the cost of capital of the levered company?
- Barry's Ltd. is all equity financed with 18,000 shares outstanding and each share sells for $22. The EBIT of the company is $50,000. The company is debating of converting into a 40% debt capital structure, with 6% interest per annum. The cost of capital is currently 10%. Ignore taxes. You are required to answer the following: (a) What is the current market value of the company? (b) What is the market value of debt in the proposed debt capital structure? (c) How many shares must be repurchased in the proposed levered company?Rian Corporation is currently working without using debt. The estimated operating profit per year is $16.065,180.00 while the equity capitalization rate (ke) is 18% pa. In the coming year, Rian is considering replacing some of his shares with a debt of $50 million, with an interest rate of 15% per annum. Question: a. Calculate the value of own capital capitalization (CS), the total capitalization value of the company (V), and the overall capitalization rate (ko) using the Net Income Approach. b. Calculate the amount of equity capitalized value, total capitalization value of the company, and overall capitalization rate using the traditional approach, if additional debt causes the equity capitalization rate (ke) to increase to 20%. c. Draw a graph of the two approaches.Savvies Ltd .is all equity financed with 18,000 shares outstanding and each share sells for $22. The EBIT of the company is $50,000. The company is debating of converting into a 40% debt capital structure, with 6% interest per annum. The cost of capital is currently 10%. Ignore taxes. You are required to answer the following: (d) What is the cost of equity in the levered company? (e) What is the cost of capital of the levered company?