Mullineaux Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 12 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 35 percent.
a. What is Mullineaux's WACC?
b. The companies president has approached you about Mullineaux's capital structure. He wants to know why the company doesn't use more preferred stock financing because it costs less than debt. What would you tell the president?

Answers

Answer 1

Answer:

a. Mullineaux's WACC = 0.60*12 + 0.05*5 + 0.35*7*(1 - 0.35)

WACC = 7.2 + 0.25 + 0.35*7*0.65

WACC = 7.2 + 0.25 + 1.5925

WACC = 9.0425%

WACC = 9.04%

b. After tax cost of debt = 7*(1 - 0.35)

After tax cost of debt = 7*0.65

After tax cost of debt = 4.55%

So since after tax cost of debt of 4.55% is less than the preferred cost of 5%, company should use debt in its capital structure.


Related Questions

How is poverty anywhere a threat to prosperity everywhere?​

Answers

Answer: Here poverty can be explained as a barrier to growth.

Explanation:

Although we indeed live today in a globalized world, where there are greater opportunities for more people, poverty continues to be a problem that can be a barrier to the growth of wealth.

Poverty interferes with the growth of the human being since it limits it and does not allow it to develop its potential, which leads it to remain at the same level where it was and contributes to the growth of poverty.

When poverty is higher, prosperity is lower. Inequalities in many aspects are becoming more marked and although it is true there seem to be greater opportunities, many times those people who come from poverty face difficulties to get out of there, which makes it a kind of circle.

The difference between indirect tax and subsidy is known as:

Select one:
a. Net Indirect Tax
b. Depreciation
c. Capital consumption allowances
d. Net Factor Income from Abroad

= Net Indirect Tax​

Answers

Answer:

A. Net Indirect Tax

Explanation:

Net Indirect Tax is the difference between the Indirect tax and subsidy. To find out Market Prices (MP), indirect taxes are added and subsidies are subtracted from Factor Cost (FC) as explained above. In short, MP includes net indirect tax whereas FC does not.

Answer:

Net indirect tax is the difference

which business is more likely to borrow from an investment bank

Answers

Answer:

Investment banks were seeking to borrow more money to trade more debt and earn more profits. Early on, for every one dollar the investment bank invested from its own funds, it invested an additional three dollars of borrowed funds.

Which of the following situations generally exists when disinflation occurs?

Select one:
a. the rate of inflation is falling from 5% to 3%
b. the rate of inflation falling from 3% to -2%
c. 3% decrease in inflation and 2% fall in unemployment rate
d. 5% increase in inflation and 3%
increase in unemployment rate

= the rate of inflation is falling from 5% to 3%

Answers

Answer:

d. 5% increase in inflation and 3% increase in unemployment rate

Explanation:

Disinflation is a term that describes the slowing down of the rate of inflation. Disinflation will occur when inflation was rising at a high rate, and then it starts to rise at a decreasing rate.  Disinflation may be a result of contractionary measures.

Disinflation is a positive situation in the economy because it represents a corrective measure. Inflation was rising at a high rate but has since started to slow down. Disinflation is different from deflation, which is a negative inflation rate. Inflation slowing from 5% to 3% is disinflation.

If the current exchange rate of the Mexican peso and the Brazilian real is 0.20 real per peso, and the equilibrium exchange rate is 0.18 real per peso, which of the following describes the foreign exchange market for the Mexican peso?
a) There is a shortage of pesos and the peso will appreciate.
b) There is a shortage of pesos and the peso will depreciate.
c) There is a surplus of pesos and the peso will appreciate.
d) There is a surplus of pesos and the peso will depreciate.
e) There is a surplus of pesos and the real will depreciate.

Answers

Answer:

A

Explanation:

Exchange rate is the rate at which 1 unit of the base currency is exchanged for the foreign currency.

the equilibrium exchange rate is 0.18 real per peso. Thus the current exchange rate is selling at a higher rate than what is indicated by the equilibrium exchange rate .

This means that the peso (base currency) is buying more unit of the real (foreign currency) at the current exchange rate.

This means there is a shortage of the Pesos. The demand for Pesos exceeds it supply, thus exchange rate would rise. When there is a shortage, value of the currency rises

The exchange rate is the rate is currencies for a single unit in the context of its value when exchanged against the foreign currency. It is used to convert domestic currency into foreign currency.

The statement describing the foreign exchange market for the Mexican peso is correct in option A) There is a shortage of pesos and the peso will appreciate.

In the given case the exchange rate is 0.18 real per peso this shows that the present or the current exchange rate is selling at a higher rate as compared to the indicated equilibrium exchange rate.

It can be concluded that the peso which is the base currency is buying more units at the current exchange rate of foreign currency. This shows the shortage of Pesos.

The shortage occurred due to excess demand over the supply of Pesos that will raise the exchange rate.

To know more about the exchange rate, refer to the link:

https://brainly.com/question/16923712

____involves relying on one's
authority position or stressing that a
request is in accordance with
organizational policies or rules.
Select one:
a. Consultation
b. Legitimacy
c. Exchange
d. Rational persuasion

= Legitimacy ​

Answers

Explanation:

legitimacy involves relying on one's

authority position or stressing that a

request is in accordance with

organizational policies or rules.

Smashed Pumpkins Co. paid $160 in dividends and $589 in interest over the past year. The company increased retained earnings by $492 and had accounts payable of $630. Sales for the year were $16,370 and depreciation was $732. The tax rate was 40 percent. What was the company's EBIT

Answers

Answer: $1675.67

Explanation:

Based on the information given in the question, the company's EBIT would be calculated as:

Earnings After Tax will be:

= Retained Earnings + Dividends

= 492 + 160

= 652

Earnings Before Tax will be:

= EAT / (1 - tax rate)

= 652 / (1 - 40%)

= 652 / (1 - 0.40)

= 652/0.60

= 1086.67

EBIT would then be calculated as:

= EBT + Interest

= 1086.67 + 589

= 1675.67

At the beginning of 2018, Artichoke Academy reported a balance in common stock of $151,000 and a balance in retained earnings of $51,000. During the year, the company issued additional shares of stock for $41,000, earned a net income of $31,000, and paid dividends of $10,100. In addition, the company reported balances for the following assets and liabilities on December 31.
Assets Liabilities
Cash $ 52,700 Accounts Payable $ 7,100
Suppies 11,000 Utilities Payable 2,600
Prepaid Rent 24,500 Salaries payable 3.600
Land 205,000 Notes payable 16,000
Required:
Prepare a statement of stockholders' equity.

Answers

Answer:

$261,900

Explanation:

Preparation of a statement of stockholders' equity

Statement of stockholders' equity:

Beginning balance Jan1 $200,000

($151,000+$51,000)

Add Issuance of common stock $41,000

Add Net income $31,000

Less Dividend ($10,100)

Statement of stockholders' equity $261,900

Therefore the stockholders' equity will be $261,900

Do you think people tailor their behavior to suit those in power more than they admit?

Answers

Answer:

yes, of course they do

Explanation:

people will always tailor their behavior wether it's against them or for them, depending on how they feel they will act a certain way

Regardless of whether something is working in their favor or against them, people will always adjust their conduct to suit their feelings.

People tailor their behavior to suit those in power more than they admit?

I concur that most people behave differently in front of influential people. They modify their actions to suit those in positions of authority. In front of influential individuals, they also refuse to acknowledge the full amount of their subordination.

From a different angle, we must recognize that those in positions of authority do so for a cause. They are required to keep society working properly and in order. Because our supervisors have coercive power over us in addition to their position, we typically perform tasks at work according to their requirements and in their preferred style.

Therefore, If we don't change our conduct to fit their needs, we risk losing our jobs. In other cases, something else that we see as being important to us might take the place of the work. The source is driven into submission or obedience by the fear of losing that "Something."

Learn more about power admit here

https://brainly.com/question/4927262

# SPJ 2

You want to purchase your first house. A conventional mortgage will require a credit score of approximately 630. Your credit score is 560. You need to increase it by 70 points to get to 630. If you increase your score by 12% per year, how many years will it take to lift your score to 630?

Answers

Answer:

1.1 years

Explanation:

The currents credit score is 560

the credit score is increasing by 12% per year is

=12% of 560

=12/100 x 560

=0.12 x 560

=67.2

The required increase is 70 points

the years it will take = 70 points /67.2 points

=1.041  years

= 1 year and one month

Suppose that Yakov, an economist from a university in Arizona, and Ana, an economist from a nonprofit organization on the West Coast, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:

Kyoko: I think it' safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain an improvement in living standards.
Jacques: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Kyoko: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.

The disagreement between these economists is most likely due to _________

a. differences in scientific judgments
b. differences between perception versus reality
c. differences in values

Answers

Answer: a. differences in scientific judgments

Explanation:

Economists generally argue about most policies due to the different schools of thought that they adhere to.

These schools of thought are influenced by scientific judgements they believe to be the most applicable to the economies of nations. This difference in opinion between these two is most likely because they follow different schools of thought with differences in scientific judgements.

Why is a spending plan an important part of financial planning? Choose all that are correct. а b C Helps to manage your money in a positive manner Helps to set and reach goals Tells you what your net worth is Helps to analyze the opportunity costs of your trade-offs to maximize financial well-being Can help to Increase net worth ​

Answers

Answer:

- Helps to manage your money in a positive manner.

- Helps to analyze the opportunity costs of your trade-offs to maximize financial well-being.

- Can help to increase net worth.

Explanation:

Having a Spending plan is very crucial to ensure that you have a sufficient amount of money every time in order to use it in time of need or emergency. It helps in keeping control and management of the money you spend which promotes a managed financial future. This further enhances your net worth as an individual by preventing unnecessary expenses and also assist in attaining financial goals more effectively and efficiently.

Work attitudes can be reflected in
an organization through
Select one:
a. All of these
b. Job satisfaction
Organisational Citizenship
Behaviour
d. Organizational commitment

= All of these​

Answers

Answer:

Indeed it is A

Explanation:

Using the following routing information and a From-To Chart, determine the total flow efficiency of the parts assuming an alphabetical order. Give your results in terms of percentage, not as a decimal value, i.e., 54.3 as opposed to .543.
Part Order Relative Weighted Value
1 R E B D C A S 4
2 R A B C D E S 2
3 R C B D A E S 3

Answers

Answer:

hello your question is incomplete attached below is the complete question

answer: 28.12%

Explanation:

The first table is the allotting of relative weighted value in from to chart and also finding the Total.

The second table is found by multiplying 1-times cell distance in the upper 2-times with cell distance in lower triangular values.

Hence Flow efficiency = (Total / penalty ) * 100

                         = ( 36 / 128 ) * 100 = 28.12%

Centrum vitamins segments its line of vitamins based on gender and age group (e.g., one line of vitamins is for men over the age of 50). This is an example of market segmentation based on variables of
a. demographics.
b. lifestyles.
c. psychographics.
d. behavior.
e. personality characteristics.

Answers

Answer:

A

Explanation:

Segmentation is the division of people into certain groups based on shared characteristics.

In demographic segmentation, people are placed into groups based on age, gender, ethnicity and other demographic factors

If the equipment account has a balance of INR. 22,50,000 and the accumulated depreciation
account has a balance of INR. 14,00,000, the book value of the equipment is
Select one:
O a. 8,50,000
O b. 17,00,000
O c. 14,00,000
O d. 36,50,000

Answers

Answer:

a. 8,50,000

Explanation:

Account balance INR, 22, 50,000

Accumulated depreciation INR. 14,00,000

The book value is the difference between the account balance and the accumulated depreciation

= INR, 22,50,000 - INR. 14,00,000

=INR, 8,50,000

The town of Franklin has an economy composed entirely of two equally sized specialized tire manufacturers. Both company X and company Z produce race car tires and airplane tires. Company X is better at producing race car tires than Company Z which is better at producing airplane tires. In order to maximize output, Company X should:_________

a. reduce its production of race car tires in order to commit resources to learn how to better produce airplane tires.
b. abandon the production of airplane tires to fully specialize in the production of race car tires and then trade with Company Z for airplane tires.
c. keep producing both products at the going rate.
d. produce both race car tires and airplane tires on its own and sell its excess race car tires to Company Z for additional airplane tires.

Answers

Answer:

b. abandon the production of airplane tires to fully specialize in the production of race car tires and then trade with Company Z for airplane tires.

Explanation:

Company X has a comparative advantage at producing race car tires

Company Z has a comparative advantage at producing airplane tires.

A country (company) has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries (companies).

A company should specialise only in the production of the good for which it has a comparative advantage.

Company X should specialise in producing race car tires and stop producing airplane tires

Company Z should specialise in producing airplane tires and stop producing race car tires

Answer:

B. abandon the production of airplane tires to fully specialize in the production of race car tires and then trade with Company Z for airplane tires.

Explanation:

Charles just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story.

a. Van writes a check for $4,000.
b. Van can easily determine that the price Of the Super is more than the price of the Duper.
c. Van has saved $4,000 in his checking account.

Answers

Answer and Explanation:

The identification of the role that money plays in each of the following transactions done:

1. In the case when Van write the check so it would be classified as the medium of exchange

2. When van would easily measures the price of the super i.e. higher than the duper price so it would be classfied as the unit of the account

3. And, when van saved the amount of $4,000 in his checking account so it would be classified as the store of the value

How many miles is 64km?​

Answers

Answer:

The Answer is 39.769 miles

Loggers are much __________ likely to supply wood to the market if property rights are not enforced.

Classify the source of market failure in each case listed.

a. A house party plays music at a very high volume, disturbing other residents in the neighborhood.
b. A single public utilities company is responsible for supplying electricity for an entire state. As a result, the utilities company can set the price of electricity.

Answers

Answer:

Loggers are much more likely to supply wood to the market if property rights are not enforced.

When property rights are not well enforced, ownership of the resource is not well defined either. This will lead to more people taking advantage of the resource like the loggers above. They will supply more wood because the ownership of their resource source is not well defined.

Options for the 2 questions below are Market Failure or Externality.

a. A house party plays music at a very high volume, disturbing other residents in the neighborhood. EXTERNALITY.

This is a negative externality. Negative externalities are when third parties suffer negative consequences as a result of transactions that they are not a party to. The neighbors are not playing music but it is disturbing them.

b. A single public utilities company is responsible for supplying electricity for an entire state. As a result, the utilities company can set the price of electricity. MARKET POWER.

The Utility company is not facing competition in this state and so can set the price it wants. This can lead to market failure simply because the company would have too much market power.

When Sarafina deposits money in an IDA, _____.


it earns the highest interest rates available at a bank

it is good for the government

an organization matches the amount she deposited

the interest on the account is not taxed

Answers

Answer:

an organization matches the amount she deposited

Explanation:

An individual development account ( IDA) is a special program account that assists low-income groups and other marginalized groups achieve financial stability. An IDA helps these individuals save for education, purchase a home or start a business.

With an IDA, the contributions individuals make are matched by the state or other donor projects. The matching initiative serves as an encouragement to the target group to save and attain financial stability.

What is my GPA if you have 5 A's and 1 F

Answers

Answer:

Honesly I don't really now but I could probobly find out

3.3 would be your gpa

Bakers are much _________ likely to supply pastries to the market if property rights are not enforced. In the presence of market failures, public policy can improve economic efficiency.

Classify the source of market failure in each case listed.

a. A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream.
b. There is only one car dealership in a small town, giving the dealership the ability to influence the price of cars.

Answers

Answer and Explanation:

In the case when the property rights are not enforced so here the bakers are less likely to supply the pastries

Now the classification of the market failure is as follows;

a. When the manufacturing firm dump the chemical water in near by river so it would be classified as an externality

b. And, when there is only one car dealership so this represent the market power

The President of a company that produces an electronic gadget and sells it in a competitive market observed that the demand for the product is represented by a linear equation of the form P = 10 - .2Qd and the supply by P = .2Qs. He asked the Vice President for Marketing what P and Q will be at equilibrium?

Answers

Answer and Explanation:

The computation is shown below:

Demand is

P = 10 - 0.2Qd

And

supply is

P = 0.2QS

Now as we know that

Equilibrium would be

Qd = Qs = Q

So

10-0.2Q = 0.2Q

0.4Q = 10

Q = 25 units is the equilibrium quantity

and P = 0.2Q

= 0.2 × 25

= $5 is the equilibrium price

5) Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulated
depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under
these circumstances, the original cost of the asset must have been:

Answers

Answer:

$110,000

Explanation:

For depreciation, a loss or gain is realized by subtracting the selling price from the book value. Accumulated depreciation is the total amount that has been deducted as depreciation amount.

I.e., profit or loss = selling price - book value

In this case, a loss of $5000 was realized, the selling price was $35,000. The book value must have been $40,000.

$35,000 - $40,000 = - $5,000

The original cost will be the book value + depreciation amount

=$40,000 +$70,000

=$110,000

Real and nominal income is calculated respectively at----

Select one:
a. Current price and current price
b. Constant price and Constant price
c. Current price and Constant Price
d. Constant price and Current price

= Constant price and Current price​

Answers

Answer: Constant price and Current price

Explanation:

Real income and nominal income is calculated respectively at the constant price and the current price.

The constant prices has to do with the real values that has taken inflation into consideration. They are typically in real value.

The current prices are the prices of goods and services at a particular point in time. Current prices are typically in nominal value.

Therefore, the answer is option D.

. Explain the puropose of the project charter ? Explain 3 tools and techniques that can be used to develop it

Answers

Answer:

It provides a preliminary delineation of roles and responsibilities, outlines the project's key goals, identifies the main stakeholders, and defines the authority of the project manager. A project charter should: Contain the essence of the project. Provide a shared understanding of the project

Explanation:

Develop a Project Charter - Tools and Techniques

Expert Judgment: A crucial step in executing the project by taking opinions from subject matter experts, garnering valuable inputs and understanding the business case complexity related to the project. ...

Data Gathering. ...

Interpersonal and Team Skills. ...

Meetings.

You are the executive vice president for Cooper Tire, the sixth largest U.S. tire maker. You have the responsibility to locate land for a new distribution center in Mississippi, and you own over 1,000 acres of land near one site in Tupelo. This could create for you:________.
A) a code of ethics.
B) the usual decision-making problems of cost versus benefit to Cooper Tire.
C) a wonderful, ethical opportunity to make a lot of money.
D) an ethical opportunity to move the distribution center to your hometown.
E) a conflict of interest.

Answers

Answer:

This could create for you:________.

E) a conflict of interest.

Explanation:

The conflict of interest will occur when, as the executive vice president for Cooper Tire, you decide to buy the land for your company from your own acres of land.  It means that your personal interests (or family, friendships, financial, or other social factors) are being served, perhaps at the detriment of your employer's.  In this situation, it is likely that you could compromise your judgment, decisions, or actions in the workplace by going ahead to acquire this land for your company because you want to serve your personal and community interests.  However, you can avoid the conflict by clearly stating your positions to your company and allow other management staff to make the needed decision with regards to your land.

Which of the following statements is correct with respect to economic incentives to release financial information?

a. Owners and managers do not have an economic incentive to supply the amount and type of financial information because it has no effect on the company's ability to raise capital at the lowest cost.
b. Companies have an economic incentive to supply the formation investors want in order to raise capital at the lowest possible cost.
c. Because financial disclosures are regulated, owners and managers have little economic incentive to supply the amount and type of financial information that will enable them to raise capital most cheaply.
d. Because companies have an economic incentive to supply information investors want, regulatory groups have intendence over the amount and type of financial information that Comores descone.

Answers

Answer:

B

Explanation:

If investors do not have adequate information about the company they are investing, they would demand an higher rate of return. This would increase the cost of raising capital. So, financial managers who want to raise capital at a cheap rate would have the incentive to disclose information

Breakthrough innovations account for ___% in the golden ratio on innovation
Group of answer choices
a. 20
b. 10
c. 5
d. 15
e. 25

Answers

E. 25 is the best answer
Other Questions
5) Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulateddepreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Underthese circumstances, the original cost of the asset must have been: 1 pointIn order to weaken China, Great Britain tried to get their entire countryaddicted to opium- a dangerous and addictive drug. How many tons ofoplum wore imported into China in 1839?7,000Opium Imports into China 1650 - 18806.5000004.39700042121.0001.0002.5532,0003901.000142200301001216100 12 11319 186the 10 041160200 Kons34721.390 ton2,958 ton Study of individual BehaviourSelect one:a. Psychologyb. Political sciencec. Anthropologyd. sociology= Psychology why this Constitution is called a federal democratic Republic Constitution How can your knowledge of acids and baseshelp you approach this problem to keep your soilviable?HELP NOW Can someone please explain these quotes. I need two sentences for each of them. I need it urgently. Thank you.Those who expect to reap the blessing of freedom must, like men, undergo the fatigue or supporting it. The public cannot be too curious concerning the characters of public men.Without freedom of thought there can be no such thing as wisdom; and no such thing as public liberty, without freedom of speech.Liberty, may be endangered by the abuses of liberty as well as the abuses of power. Which diagram most correctly represents the process of mitosis? Which concept in prose is similar to the idea of a poem's "movement"?A. CharacterB. Point of viewC. Denouement D. Flow How do temperature and pressure change as you move from the crust of the Earth towards the core of the Earth?A.Temperature and pressure both increase.B.Temperature increases and pressure decreases.C.Temperature and pressure both decrease.D.Temperature and pressure do not change. 4. What was the benefit of using indirect rule in India as opposed to direct rule?O A. Indirect rule made it easier to trade with other European nations.O B. Indirect rule allowed many more freedoms for British colonizers.O C. Indirect rule did not require permission from the British government.O D. Indirect rule was less likely to face resistance from the Indians. Kara earns 12 cent for each paper she delivers. If she delivers papers to 42 customers each day, how much does she earn in 1 week ? If you could help I would really appreciate it, but if not thats fine. Thank you. Which of the following describes a major consequence of the 1906 Atlanta riot? *PLEASE HELPAfrican American suffrage in the area decreased.Major industries fled the city for other regions.New political groups seized local control.Segregation within the city increased. What central ideas are prevalent in both Common Sense and Washingtons Farewell Address? How does each text address these central ideas? Plssssss help which statement is the clearest translation of 4+6z=12. Please help, homework is due tomorrow!!Write three full paragraphs on Effectiveness of Advertising and how it affects teens. Helps pls ill give u points lel What is the equation that represents this patternThanks Pls help, I know the answer but what I wrote in the box isn't correctHow do I show the answer? Find the smallest non-zero whole number n such that 756n is a perfect cube.