Gratinut Entos, an automobile company, wants to launch a new model of bike that would appeal to young adults. The company issues its own formal IOUs to fund the project. Which of the following sources of long-term funds is being used by Gratinut Entos in the given scenario?
A. Term loans
B. Commercial paper
C. Corporate bonds
D. Direct investments from owners
Answer: C
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In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured
Indicate whether the statement is true or false
The computation of the reliability of a system assumes that the reliability of a component in that system is ______.
A. independent of the reliabilities of all the other components B. dependent on the reliabilities of some of the other components C. dependent on the reliability of one of the other component D. dependent on the reliabilities of all the other components
Unincorporated entities are typically treated as flow-through entities for tax purposes.
Answer the following statement true (T) or false (F)
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. Based on the CAPM, what is the firm's cost of common stock? A. 11.15% B. 11.73% C. 12.35% D. 13.00% E. 13.65%