An investment that has earned a high rate of return over the last 5 years will not necessarily continue to perform well in the future

Indicate whether the statement is true or false.


Answer: FALSE

Business

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Collins GroupThe Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below.

Assets Current assets$  38,000,000 Net plant, property, and equipment  101,000,000 Total assets$139,000,000   Liabilities and Equity Accounts payable$  10,000,000 Accruals      9,000,000 Current liabilities$  19,000,000 Long-term debt (40,000 bonds, $1,000 par value)    40,000,000 Total liabilities$  59,000,000 Common stock (10,000,000 shares)30,000,000 Retained earnings    50,000,000 Total shareholders' equity    80,000,000 Total liabilities and shareholders' equity$139,000,000 The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00. The beta is 1.25, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 25%. Refer to the data for the Collins Group. Which of the following is the best estimate for the weight of debt for use in calculating the firm's WACC? A. 18.67% B. 19.60% C. 20.58% D. 21.61% E. 22.69%

Business

Identify what kind of sentence this is: Call me when you get home!

a. exclamatory b. declarative c. interrogative

Business

In the People's Republic of China, domestic contract law serves largely to enforce commitments made between state agencies

Indicate whether the statement is true or false

Business

Long-term debt backed by some physical asset other than land is a mortgage loan.

Answer the following statement true (T) or false (F)

Business