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Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the WACC based on the CFO’s preference (i.e., market value weights)? What is the WACC based on the president’s preference (book value weights)?
Complete the flexible budget at the 90,000-unit level of activity. Consider that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 % of operating income.
Preparation of necessary entries for declaration and payment of dividend and Prepare the necessary entries for the declaration and payment of the stock dividend.
Effect on the contribution margin per unit and the contribution margin ratio and calculation used in a CVP analysis is the breakeven point.
Preparation of Journal entries to record stock dividend and stock split - Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split
What is Phoenix's merge retained earnings balance at 31 st December, 2013?
What characteristics must the convertible bonds display in order to justify the accounting treatment followed on initial recognition and how was the portion of the bonds assigned to debt on initial recognition valued
Sinking fund payments for issue of bonds - What is the lowest level to which O'Dowell's EBIT can drop in the first year the bonds are issued without violating the covenants of the loan? O'Dowell's tax rate is 40%.
In the payback method, depreciation is added back to net operating income when computing the net annual cash flows and net present value method and the internal rate of return method can be used as a screening tool in capital budgeting decisions.
Prepare a pro forma balance sheet dated December 31, 2008 and show the financing changes suggested by the statement prepared in part A
Indicate how dividends should be distributed to the preferred stock and common stock. Total and per share.
Create the adjusting entries using good form for each of the subsequent situations as of January 31 (measurement date) for the one month of January
Which company will have the higher debt/capital ratio (assume no other debt and identical equity)? ABC's debt matures in 18 months and DEF's debt matures in 9 years. Illustrate what would be the effect on your analysis?
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