a) Norton Industries had called upon Ann as they were in need of some advice for how to set a rate for the how much return was needed to run their company. Their balance sheet looks as follows: The tax rate is 20% Fixed Assets £ 1 100 000,00 Equity £ 500 000,00 Inventories £ 700 000,00 Bonds £ 200 000,00 Accounts receivables £ 500 000,00 Long term loans £ 1 200 000,00 Liquid Assets £ 300 000,00 Short term loans £ 500 000,00 Creditors £ 200 000,00 Total £ 2 600 000,00 £ 2 600 000,00 Share holders demands a return on equity of 10% and it takes 5% to serve the Bonds. The bank demands 3% for long term loans and 5% for short term loans. What would then be the weighted average cost of capital be? 4 ponts
a) Norton Industries had called upon Ann as they were in need of some advice for how to set a rate for the how much return was needed to run their company. Their balance sheet looks as follows: The tax rate is 20% Fixed Assets £ 1 100 000,00 Equity £ 500 000,00 Inventories £ 700 000,00 Bonds £ 200 000,00 Accounts receivables £ 500 000,00 Long term loans £ 1 200 000,00 Liquid Assets £ 300 000,00 Short term loans £ 500 000,00 Creditors £ 200 000,00 Total £ 2 600 000,00 £ 2 600 000,00 Share holders demands a return on equity of 10% and it takes 5% to serve the Bonds. The bank demands 3% for long term loans and 5% for short term loans. What would then be the weighted average cost of capital be? 4 ponts
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
| a) | Norton Industries had called upon Ann as they were in need of some advice for how to set a rate for | ||||||
| the how much return was needed to run their company. Their |
|||||||
| The tax rate is 20% | |||||||
| Fixed Assets | £ 1 100 000,00 | Equity | £ 500 000,00 | ||||
| Inventories | £ 700 000,00 | Bonds | £ 200 000,00 | ||||
| Accounts receivables | £ 500 000,00 | Long term loans | £ 1 200 000,00 | ||||
| Liquid Assets | £ 300 000,00 | Short term loans | £ 500 000,00 | ||||
| Creditors | £ 200 000,00 | ||||||
| Total | £ 2 600 000,00 | £ 2 600 000,00 | |||||
| Share holders demands a |
|||||||
| The bank demands 3% for long term loans and 5% for short term loans. What would then be | |||||||
| the weighted average cost of capital be? 4 ponts | |||||||
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