What is the weighted cost of capital for el suezo

Assignment Help Cost Accounting
Reference no: EM13938611

Weighted Average Cost of Capital and Economic Value Added El Suezo Inc. had after-tax operating income last year of $600,000. Two sources of financing were used by the company: $2.5 million of mortgage bonds paying 8 percent interest and $10 million in common stock, which was considered to be no more or less risky than other stocks. The rate of return on long-term government bonds is 6 percent. El Suezo pays a marginal tax rate of 40 percent. Total capital employed is $5.3 million.

Required:

1. What is the weighted cost of capital for El Suezo?

2. Calculate EVA for El Suezo.

Reference no: EM13938611

Questions Cloud

Influence the successful dissemination and utilisation : Rationale for your evaluation plan addressing key design issues that are relevant to your example. For example, you should address and justify decisions about scope, timing, stakeholders, who will udertake the evaluation, process/impact/ outcome e..
Discuss the main importance of business intelligence : Discuss the main importance of business intelligence. Explain on how the use of business intelligence and decision support can help to provide values to the company.
Mobile device security : Suggest three (3) benefits that organizations can gain from deploying a Mobile Device Management (MDM) security solution. Additionally, suppose that an organization chose not to deploy an MDM solution. Determine what you believe to be the major risks..
What did dennis stevens mean by a silent deal : Name and then describe the theory that Laub and Sampson developed. What did Dennis Stevens mean by a "silent deal"? What is "bulletproof software" and who developed it? Discuss Thornberry's views on delinquency
What is the weighted cost of capital for el suezo : Weighted Average Cost of Capital and Economic Value Added El Suezo Inc. What is the weighted cost of capital for El Suezo? Calculate EVA for El Suezo.
Theory of creep and viscoplasticity : Principles associated with the theory of Creep and Viscoplasticity need to be identified and your understanding of these principles. Graphs, tables, calculation etc should be included for better illustration.
Please correct the errors with replacement lines : Please correct the errors with replacement lines beside it. And then give short notes on why it is wrong.
Which symbol would be used in a flowchart : Which symbol would be used in a flowchart for the following statement?Read customerName
What is the meaning of negative residual income or eva : What is residual income? What is EVA? How does EVA differ from the general definition of residual income? Can residual income or EVA ever be negative? What is the meaning of negative residual income or EVA?

Reviews

Write a Review

Cost Accounting Questions & Answers

  Prepare the closing entries for the above accounts

Sales Discounts $3,600, Cost of Goods Sold $110,000, Rental Revenue $6,000, Freight-out $1,800, Rent Expense $8,800, and Salaries and Wages Expense $22,000. Prepare the closing entries for the above accounts.

  Analysis to discount the cash flows

If NPV is positive, the Board of Directors will decide to accept the project of expansion of the markets; If NPV is negative, the Board will decide to reject the project.

  Computing and recording minimum pension liability

Compute the minimum pension liability, if any, for 2008, and prepare any necessary journal entries to record the minimum liability - Computing and Recording Minimum Pension Liability

  What is the amount of a gain or loss on realization

What is the amount of a gain or loss on realization and how should the gain or loss be divided between Lyle and Fisher?

  Prepare an income statement for each year based on full cost

Prepare the following, using a spreadsheet. An income statement for each year based on full costing and An income statement for each year based on variable costing.

  Calculate the contribution per unit that pumpworks

Analyse and discuss the budgeted income statement for April 2005 and the detailed costs of Pumpworks, and calculate the contribution per unit that Pumpworks would make if it accepted the order from SA Mining Ltd.

  Questionsimpson brothers manufacturing company has been

questionsimpson brothers manufacturing company has been using a traditional overhead allocation technique to allocate

  Prepare the partners capital statement

Prepare the partners capital statement for the year and prepare the owners' equity section of the balance sheet at December 31, 2012.

  Discussion of historical cost accounting

You are required to critically evaluate the above statements. Your answer should include a comparative analysis of the significant measurement models in accounting.

  Calculate the return on assets for 2011

Explain whether translation has distorted the Spanish subsidiary's performance in 2012 compared with 2011.  If so, explain how changes in the exchange rate contributed to the distortion.

  Critically explain cost accounting as

critically explain cost accounting as 1. a service activity 2. a descriptive/analytical discipline 3. an information system

  What is the amount of depreciation expense

What is the amount of depreciation expense for each of the five using the straight line method and what is the amount of depreciation expense for each of the five years using the double declining balance method?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd