Laramie Trucking's CEO is considering a change to the company's capital structure, which currently consists of 25% debt and 75% equity. The CFO believes the firm should use more debt, but the CEO is reluctant to increase the debt ratio. The risk-free rate, r RF, is 5.0%, the market risk premium, RP M, is 6.0%, and the firm's tax rate is 25%. Currently, the cost of equity, r s, is 11.5% as determined by the CAPM. What would be the estimated cost of equity if the firm used 60% debt? (Hint: You must first find the current beta and then the unlevered beta to solve the problem.)

Answers

Answer 1

Answer:

17.74%

Explanation:

Calculation to determine What would be the estimated cost of equity

First step is to calculate the Original beta using this formula

Original beta = (rs-rRf)/ RPM

Let plug in the formula

Original beta = 11.5%- 5%

Original beta = 6.5%/ 6%

Original beta = 1.083

Second step is to calculate original D/E using this formula

original D/E= D/A / (1-D/A)

Let plug in the formula

original D/E = .25/ (1-.25%)

original D/E = .333

Third step is to calculate Unlevered Beta using this formula

Unlevered Beta= Bu = Bl / 1+((1- Tax rate) x (D/E)

Let plug in the formula

Unlevered Beta= 1.083/1+((1-.25) x .333

(D/E) =1.083/1+(0.75*.333)

(D/E) =1.083/1+.24975

(D/E) =1.083/1.24975

(D/E)=0.87

Fourth Step is to calculate the Target D/e

Target D/e = .6/.25

Target D/e = 2.4

Fifth step is to calculate the New Beta using this formula

New Beta = bu* (1+(D/E)(1- tax rate)

Let plug in the formula

New Beta= .87 *(1+(2.4)*(.6)

New Beta= .87 *(1+1.44)

New Beta= .87 *2.44

New Beta=2.1228

Now let calculate the estimated cost of equity using this formula

rs = rRF + new beta (RPm)

Let plug in the formula

rs= 5% + 2.1228*6

rs= 17.74%

Therefore the estimated cost of equity will be 17.74%


Related Questions

Help me please.. there is no option on here for Human Resources principals, so I jus clicked business as the subject..

Answers

Answer:

B. 60 days.

Explanation:

The Worker Adjustment and Retraining Notification Act (WARN) requires employers to satisfy the notice requirements usually in 60 days before sacking. This is however not applicable to unforeseen issues that may affect the business requiring sacking such as natural disaster

You are a struggling song writer. You hear a group on the radio singing a song
that you wrote with a friend who is now managing the band. You want to
make sure you are not cheated out of your creative work. You have tried to
talk to the band but they won't respond. What writ would effectively stop the
band from earning income on that song until the problem is remedied?
A. A mandatory injunction
O B. A permanent injunction
O C. A restraining order
O D. Punitive damages
My

Answers

Answer:

did you copyright the song because i think you cant do nothing to the band being manage b your best friend will

Explanation:

Answer:

B. A permanent injunctionExplanation:

Economics (FoolProof)

Which a debit or ATM card, you are spending your own money. With a credit card, you are always borrowing money.

True or False

Answers

Answer:

True

Explanation:

When payments are made from debit or ATM card, the amount is directly deducted from the saving account of the user.

However, in case of credit card, the money spent is a loan taken from banks which is to be paid at the end of every month. In case of delay of payment, fine is also imposed.

Hence, the given statement is true

When you look out your window and see a large, brown truck parked in your driveway, with a person in a brown uniform carrying a package to your front door, do you know who it is without reading the truck’s lettering? Maybe you recognize the standard colors of UPS—a package delivery service that falls into the Transportation and Logistics Career Cluster. Do some research online to find four specific jobs at UPS. See if you can identify the career pathway that each one falls under. Then describe the location in which each professional would likely work.

Answers

Answer: There are many different types of people the work at UPS here are a few. First of all, there is a Warehouse worker that works in a warehouse and sorts out packages. Secondly, there is an automotive technician wich changes and repairs basic truck parts and works at the truck lot or in a garage. Also, there is a billing associate which works in a corporate office. Lastly, there is a delivery person the most commonly known UPS worker that delivers packages to people and works mainly on the road (in a truck on the road not literally like a construction worker on the road).

Explanation:

Here are just a few of the many different types of people who work at UPS. First, there is a warehouse worker who organizes parcels while working in a warehouse. Second, there is an automobile mechanic who works at a truck lot or in a garage and changes and fixes standard truck parts.

What is meant by  Transportation and Logistics ?

Logistics refers to acquiring, producing, and distributing commodities to a final consumer in the appropriate quality. The planning, management, and use of procedures for the most effective and efficient storage and movement of goods and services are all included in the field of logistics science.

Services and other information are sent through logistics channels from the source point to the consumer in order to satisfy and meet customer needs. In comparison to transportation services, logistics has more benefits and completes more tasks. Logistics managers must make decisions based on aspects such as packaging, containerization, documentation, insurance, storage, importing and exporting, rules, and freight damage.

Learn more about Transportation and Logistics , from :

brainly.com/question/28848814

#SPJ3

To develop the main points for a speech on a question of value, you should ask
a а "How do you know?"
b. "Why is this good or bad?"
С "Why is true?"
d "How is this better than what we have now?"

Answers

Answer: B

Explanation:

You are an HR consultant. Which of the following would likely be one of your suggestions for measuring the effectiveness and success of a company's recruitment plan?​

Answers

Answer:

Access the results of variius recruitment strategies used.

Answer:the person who commented the answers is wrong its

Explanation:

1.d

2b

3c

4a

5b

6d

7c

8b

9a

10a

State
five
features distinguishing Features of servicing​

Answers

Answer:

The answer is below:

Explanation:

Services are a byproduct of a business firm which is done in exchange for money. However, unlike the products or goods, it has its distinct features or characteristics.

Hence, there are various Features of services, some of which includes the following:

1. Intangibility: they are not tangible or cannot be touched

2. Perishability: they cannot perish like goods

3. Inseparability: services under the ae work or elements cannot be separated like goods

4. Heterogeneity: the quality of services is diverse, hence, the price and time of delivery vary.

5. Ownership: unlike the goods, when it comes to services the person rendering services is the one that tends to move around.

National Family Opinion (NFO) contacts several hundred members of its consumer panel and provides them with a printed description of a new chewing gum and its package. Consumers are then given a survey containing several multiple-choice questions about their attitudes toward the new product, based on what they read in the description. The final survey question asks consumers to indicate the likelihood that they would purchase the product. NFO seems to be conducting a: a. Market test b. Concept test c. Prototype test d. Sensitivity test e. Attitude test

Answers

Answer: concept test

Explanation:

Based on the information given, we can infer that National Family Opinion (NFO) is conducting a concept test.

Concept testing is the process whereby surveys are used in the evaluation of the acceptance of a new product by the consumers before the product is introduced to the market.

Since the consumers are given a survey which contains different multiple-choice questions about their attitudes toward the new product,

Therefore, the correct option is B.

Two reasons why it is important for a chocolate manufacturing company(or any company) to develop new products?

Answers

Two offer more product
I don’t know ................

1,1. What is a Fixed Asset Register.Explain how this document assists
management in keeping internal control over fixed assets. (4)​

Answers

Answer:

A fixed asset register is a detailed list of all fixed assets which are owned by a business. Its main purpose is to enable an organization to accurately record and maintain both financial and non-financial information pertaining to each asset and to easily identify and verify an asset when required.

Explanation:

Fiscal policy is likely to fail to correct stagflation in an economy because _____ a. it affects aggregate supply only, but only aggregate demand needs to be changed. b. it affects aggregate demand only, but aggregate supply also needs to changed. c. it affects both the aggregate demand and supply, but only aggregate demand needs to be changed. d. it affects both the aggregate demand and supply, but only aggregate supply needs to be changed. e. it affects either aggregate demand or aggregate supply, but both need to be changed simultaneously.

Answers

Answer:

b. it affects aggregate demand only, but aggregate supply also needs to be changed.

Explanation:

Fiscal policy in economics refers to the use of government expenditures (spending) and revenues (taxation) in order to influence macroeconomic conditions such as Aggregate Demand (AD), inflation, and employment within a country. Fiscal policy is in relation to the Keynesian macroeconomic theory by John Maynard Keynes.

A fiscal policy affects combined demand through changes in government policies, spending and taxation which eventually impacts employment and standard of living plus consumer spending and investment.

Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.

Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.

Fiscal policy is likely to fail to correct stagflation in an economy because it affects aggregate demand only, but aggregate supply also needs to be changed.

How far do most developers push their databases in normalization?
O to the first normal form
O to the second normal form
O to the third normal form
O to the fourth normal form

Answers

Answer:

c

Explanation:

What field should be moved out of a table if Customer ID is the primary key? address O package size O phone number O customer name​

Answers

Answer:

package size

Explanation:

all the others are stuff abt the customer

Answer:

B

Explanation:

gives 2 examples of an advocacy campaign and discusses two ways it can create awareness

Answers

Two examples of an advocacy campaign:

Earth hours - This campaign was started in Australia to promote and protect the environment. ...

Sweetie - This campaign was directed to tackle the sexual exploitation problem and global child trafficking, through a computer-generated child called sweetie.

It uses a creative and unique technique to get people's attention.

An advocacy campaign may include volunteering for a non profit organization working to bring awareness to global poverty and organizing public lectures on HIV/AIDS disease

What is raising an awareness and How to raise awareness

Raising of awareness is the process of educating a group of people about a topic or issue so that they can develop a positive attitudes and behavior.

Advocacy campaigns are organized movements that involve creating awareness on political issues at the local, state, or national level. Example is:

Volunteering for a non profit organization working to bring awareness to global poverty.Organizing public lectures on HIV/AIDS disease.

Volunteering is for the betterment of the community.

Find out more on raising awareness at: https://brainly.com/question/17248785

Suppose a company decides to lay off 150 workers to increase share values as a result some interested parties would benefit while others would suffer this scenario demonstrates the concerns with the _____ theory of social responsibility.


A. Maximizing profits
B. Stakeholder interest
C. Corporate citizenship
D. Moral minimum

Answers

Answer:

Corporate citizenship

The answer would be B because I found it on another site

What is the name for the process that marketers use to plan, develop, execute, and evaluate coordinated, measurable, persuasive brand communication programs over time to target audiences?

Answers

Answer:

Integrated Marketing Communication

Explanation:

As the name implies, the concept of integrated marketing communication is aimed at leveraging the power that comes with the synergy between different marketing and communication tools and services such as consistent and repetitive advert placement, sales and promotional offers, coordinated and friendly marketing campaigns, and son on, all these carefully and strategically tailored towards the gradual and steady capture of a specific target audience over a certain period of time. These integrated marketing strategy or procedure is aimed towards such audience so that it would cover all aspects of the consumers wants in other to ultimately impact their deciak making and adoption of the product or services.

An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. How much profit will the airline earn if it engages in price discrimination

Answers

Answer:

The answer is "$55000".

Explanation:

When discrimination against prices is practicable, $600 would be charged to travelers and $300 to tourists. Now,

Total revenue(TR) [tex]=P \times Q[/tex]

                               [tex]=600\times 100+300 \times 50 \\\\ =600\times 100+15,000 \\\\ =60,000+15,000 \\\\=\$75,000[/tex]

Total Cost(TC)[tex]=\$20000[/tex]

Profit[tex]=TR-TC[/tex]

           [tex]=\$75000-\$20000 \\\\ =\$55,000[/tex]

What criteria should be met before a data bar can be used in a report? Check all that apply. text fields numerical field drop-down menus all are primary keys all values can be compared length depends on value in field​

Answers

Answer:

2 5 & 6 [numerical fields, all values can be compared, & length depends on value in field] are your answers.

Explanation:

Got it right on EDG21

Answer:2,5, and 6

Explanation:

An example of government spending when calculating the GDP using the expenditures approach is _____.


A. medical expenses

B. any investment expenditure by a government

C. the purchase of a building

D. none of the above

Answers

Answer:

Maybe D, The answer should be "salaries of public employees"

Answer:

Medical expenses

Explanation:

EDG 2021 Business Entreprenuership

Suppose the government wanted to regulate this market using a price-based instrument. What is the efficient level of a tax on emissions?

Answers

Answer:

Tax = Marginal External Damage

Explanation:

When a negative externality distorts market outcome, we often see that a government intervention is needed. We must incorporate the negative externality into the private decision of the producer. That is to say that we add marginal damage caused by the externality to the marginal private cost of production. The social outcome will be at the point where marginal social cost (MSC) is equal to Marginal private benefit (MPB).

Thus, the efficient level of tax on emission is set equal to the marginal external damage.

Tax = t  = MED

MSC = MPC + MED

        = MPC + t

Computer equipment was acquired at the beginning of the year at a cost of $66,600 that has an estimated residual value of $4,100 and an estimated useful life of five years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

Answers

Answer:

Depreciable cost = Cost of equipment - residual value

Depreciable cost = 66,600 - 4,400

                             = $2,200

Annual depreciation = cost - residual value / useful life

Annual depreciation = 66,600 - 4,400 / 5

                                  = 12,440

Straight-line rate = Annual depreciation expense / cost - residual value

Straight-line rate = 12,400 / 66,600 - 4,400

                            = 0.199

The Acmeville Metropolitan Bus Service currently charges $0.99 for an all-day ticket, and has an average of 588 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is considering increasing the ticket price to $ 1.1 . The marketing department's studies indicate this price increase would reduce usage to 337 riders per day. Calculate the absolute value of the price elasticity of demand for bus tickets using the simple percentage change method. Round your answer to one decimal place.

Answers

Answer:

-3.88 or 3.88

Explanation:

Calculation to determine the absolute value of the price elasticity of demand

Using this formula

Price elasticity of Demand = % change in quantity demanded / % change in price

Price elasticity of Demand =%∆QD / %∆P

Let plug in the formula

Price elasticity of Demand= (( 337 - 588 )/( 1.1- 0.99)) * ( 0.99 / 588 )

Price elasticity of Demand= (-251 / 0.11) * ( 0.0017)

Price elasticity of Demand= -22,81.8181 * 0.0017

Price elasticity of Demand= -3.88 or 3.88 ( absolute value)

Therefore the absolute value of the price elasticity of demand will be -3.88 or 3.88

Tell, Inc., leased a building from Lott Corp. Tell paid monthly rent of $500 and was also responsible for paying the building’s real estate taxes. On January 1, Vorn Co. and Tell entered into an agreement by which Vorn was entitled to occupy the building for the remainder of the term of Tell’s lease in exchange for monthly payments of $600 to Tell. For the year, neither Tell nor Vorn paid the building’s real estate taxes, and the taxes are delinquent. Learning this, Lott demanded that either Tell or Vorn pay the delinquent taxes. Both refused, and Lott has commenced an action against them. Lott will most likely prevail against

Answers

Answer:

Tell and Vorn

Explanation:

Based on the information given Lott will most likely prevail against TELL and VORN reason been that we were told that both TELL and VORN entered into an agreement on January 1 which means that both of them will be responsible for the DELINQUENT TAXES which has not been paid because Vorn occupy the building that was leased out to Tell from Lott Corp in exchange for the amount of $600 which will be monthly paid by Vorn to Tell, which means that in a situation were the taxes is said to be DELINQUENT TAXES in which neither of them paid the building's real estate taxes, Lott will most likely prevail against both TELL and VORN.

If the Table Analyzer finds unrelated data in a table, what does it suggest a user do?
O split the table into queries
O break the table into multiple tables
O move all the data to a new report
O move some data to a different database

Answers

Answer:

break the table into multiple tables

Explanation:

Answer:

B

Explanation:

When government is trying to raise tax revenue, it sometimes attempts to target higher-income people because they are in a better position to bear the burden of a tax. However, it can be very difficult to earn tax revenue from wealthy people. Consider the progressive nature of the U.S. federal income tax system: It's designed so that higher incomes are taxed at higher tax rates. Thinking about the elasticity of labor supply, why might it be more difficult to collect tax revenue from a wealthy individual than from a poor person, all else equal

Answers

Answer: The labor supply curve for a wealthy individual is usually more elastic than a poor person's labor supply curve

Explanation:

Tax could be described as individuals paying a particular percentage of their income and whatever they use then pay to the government. The aim of the tax being collected is to generate funds internally which could be used in maintaining the economy.

Despite the government attempts to make tax be one-sided, it yields little or no result in favour of the poor as they end up being well tax as same as the rich. Those who are poor make use of services regularly, and most societies have them than those who are already established. The labor supply curve for a wealthy individual is usually more elastic than a poor person's labor supply curve. We would realize that we have more poor people in labour than those who are rich.

how will you explain a yellow colour to someone who has never seen before??​

Answers

Answer:

it is a bright color close to orang but lighter with a tint of white added to orange to make a bright floresent color

Explanation:

Answer:

well, I will explain it like this Yellow is the warm sun while a cool breeze blows on your face. Yellow is exciting without being loud or angry.

Explanation:

Hope this is helpful! Stay safe and God Bless you:)

What are some benefits of paying taxes? Check all that apply.

ensuring that the needs of the nation are fulfilled
paying for public works such as highways and museums
reducing the amount of money consumers can spend
slowing growth in the economy
paying for government programs that help citizens

Answers

Answer:

A,B,E

Explanation:

got it right on test

Answer:

a b e

Explanation:

right on edge

Indicate whether each of the following transactions represents an increase in net exports, a decrease in net exports, an increase in net capital outflow, or a decrease in net capital outflow for the United States. Transaction Net Exports Net Capital Outflow Increase Decrease Increase Decrease The Japanese car manufacturer Nissan builds a factory in Ohio. A German citizen buys an Apple computer. An American buys a Sony TV. An American fashion company opens up an outlet in the U.K.

Answers

Answer:

Net export decreases and net capital outflow decreases

Net export increases and net capital outflow decreases

Net export decreases and net capital outflow increases

Net export increases and net capital outflow increases

Explanation:

Net export = export - import

export would comprise of goods and services produced in the US that are been sold to foreign countries

Import would comprise of foreign produced goods and services that are been sold in the US

Net export would increase when export occurs and decrease when import occurs

Net capital outflow measures the flow of funds in a country. It is the difference between purchase of foreign assets by the citizens of a country and the purchase of domestic assets by foreigners

Net capital outflow = purchase of foreign assets by citizens - purchase of domestic assets by foreigners

Net capital outflow is positive when purchase of foreign assets occur and negative when purchase of domestic assets occur.

1. the setting up of the factory is an import and there is a flow of funds into the US economy. Thus, net export and net capital flow decrease

2. A Apple computer is produced in the US. The sale to a German constitutes an export but there is a flow of fund into the US economy. net export increase and net capital outflow decreases

3. Sony is not produced in the US. the purchase of the TV constitutes an import and there is a flow of funds out of the US economy. Net export reduces and net capital outflow increases

4. The opening of the fashion company outlet in the UK constitutes an export and there is a flow of funds out of the US. Net export increases and net capital outflow increases

Jena is a full-time undergraduate student at State University and qualifies as a dependent of her parents. Her only source of income is a $10,000 athletic scholarship ($1,000, books; $5,500, tuition; $500, student activity fee; and $3,000, room and board). Jena's gross income for the year is: a.$3,000. b.$4,000. c.$500. d.$10,000.

Answers

A. 3,000 that’s your answer

Read the passage. What department does Marnle work in? What is her profession?
Marnee works in a university's department. She used to be a Math teacher, now she advises other teachers on selecting text books and
making lesson plans. She no longer teaches.
Marnee works in the____
department. She is an)_____
1)option. A Administration B Support C Faulty 2) option A Academic dean B Superintendent of schools C Curriculum developer

Answers

Answer:

1.She is an administration

2. Works as a Curriculum developer

Other Questions
Michael is opening a savings account for college. The expression 2,300(1.002)12t represents the dollar amount in the account after t years.Part AWhat does the value 2,300 represent in the expression? The distance between two cities on a map measure 3.71 inches. The scale on the map shows that 2 inches is equal to 50 miles. How many miles apart are the two cities The following information is available for Quality Book Sales's sales on account and accounts receivable: Accounts Receivable Balance, January 1, Year 2 $78,500 Allowance for Doubtful Accounts, January 1, Year 2 4,710 Sales on Account, Year 2 550,000 Collections of Accounts Receivable, Year 2 556,000 After several collection attempts, Quality Book Sales wrote off $2,850 of accounts that could not be collected. Quality Book Sales estimates that 0.5% of sales on account will be uncollectible. Required:(A) Compute the following amounts: (1) Using the allowance method, the amount of uncollectible accounts expense for Year 2. (2) Net realizable value of receivables at the end of Year 2.(B) Explain why the uncollectible accounts expense amount is different from the amount that was written off as uncollectible.(1) Uncollectible accounts expense is an estimate of current receivables that may eventually be uncollectible.(2) Uncollectible accounts expense is the actual amount that was determined in the current accounting period to be uncollectible. Find the length of the third side if necessary write in simplest radical form If 40% of a number is 14, find 20% of that number. Odysseus offers the Cyclops wine in an effort to Many of the poorest performing schools in the country are also located in some of the most economically disadvantaged areas.It's pretty safe to say that poor performance in school is caused by poverty. Government funding for education should be distributedin such a way that poorer school districts get more money than the districts where parents earn higher incomes. How is this passage an example of faulty cause and effect reasoning? A. It implies that students at poor schools are not as intelligent as other students.B. It assumes that poverty alone is the cause of poor school performance.C. It reasons that schools in impoverished areas should receive more funding.D. It suggests that children whose parents make more money should suffer. finding missing angles in triangles worksheet answers house Submit your nota bene paragraph (5-7 sentences) about a current event in your life. Use as many of your spelling wordsas you can, and check that you spell them correctly and underline them.Word bank: benefactor, benevolent, benediction, beneficiary, benefactress, beneficial, benefit, beneficence, glacier,environment How did the civil war impact women, combatants, and civilians in different ways?By the way, if I use plagiarism I will fail, and therefore if you use plagiarism, I will report you.Also if you use some kind of file hosting site kind of scam please just don't bother. PLZZZZZZZZZZZZZZZZ helppp Fred kicks a ball with a force of 20n to George, who is 5m away. How much work was done to the ball What current issues are examples of the tug-of-war" for a stronger role between the national and state government? 4E2422.4X-214D1. What's the distance between points C & D?2. What's the distance between points E & D?square unitssquare units3. What is the area of triangle CDE shown in the coordinate plane above?square units One way of checking the effect of undercoverage, nonresponse, and other sources of error in a sample survey is to compare the sample with known facts about the population. About 12% of American adults identify themselves as black. Suppose we take an SRS of 1500 American adults and let X be the number of blacks in the sample. Use a Normal distribution to estimate the probability that the sample will contain between 165 and 195 blacks. Usually the outermost planet of the solar system is Jupiter.Please select the best answer from the choices providedOF the temperature is -2c if the temputure rises to 15c , what is the new temputure What details help you understand a characters perspective when he or she is not the narrator? The ability to reason well is necessary for modern workers because __________.a.Communication with other workers will be difficultb.Creativity is not valued in the modern workplacec.They will often have to solve problems with limited informationd.Most problems will be straight-forward and easy to solve como podemos definir la educacion fisica hoy en dia ??