Calculate Bodacious Bodywear's weighted average cost of capital under the following conditions:
*The firm has 30% debt, 10% preferred stock, and 60% equity.
*The cost of common equity is 14% and the cost of preferred stock is 9%.
*The firm's debt has a before-tax cost of debt of 10% (including flotation costs).
*The firm is in the 40% tax bracket
A) 11.1%
B) 8.5%
C) 12.3%
D) 10.5%
A
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In computing interest, it is customary to consider 360 days as a year
a. True b. False Indicate whether the statement is true or false
Residual income is calculated as
A) operating income - (ROI x average operating assets). B) operating income/(ROI x average operating assets). C) operating income/(minimum rate of return x average operating assets). D) operating income - (minimum rate of return x average operating assets). E) (minimum rate of return x average operating assets)/operating income.
According to ________, the accountant is liable to any reasonably foreseeable user of the statement the accountant prepares
A) the Ultramares Doctrine B) Section 552 of the Restatement (Second) of Torts C) the reasonably foreseeable user rule D) market share theory
Vell Inc. uses lean principles to reduce cycle time. Through production improvements the process time was reduced from 4.5 days to 2 days. Inspection time is 0.25 days. Strategic rearrangement of the production area reduced move time to 0.1 days. Wait time was 3 days, but due to improved scheduling and ordering has been reduced by 2.25 days. Total cycle time for Vell after the improvements is:
A. 7.6 days. B. 5.35 days C. 2.0 days D. 3.1 days E. 2.75 days