GM has a book value of $8 billion of equity and a face value of $12 billion of debt. What are the weights in equity and debt that are used for calculating the WACC? a. 0.4, 0.6. b. 0.6, 0.4. c. cannot be determined.

GM has a book value of $8 billion of equity and a face value of $12 billion of debt. What are the weights in equity and debt that are used for calculating the WACC? a. 0.4, 0.6. b. 0.6, 0.4. c. cannot be determined.

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter10: The Cost Of Capital

Section: Chapter Questions

Problem 3DQ: Next, we need to calculate MMMs cost of debt. We can use different approaches to estimate it One...

See similar textbooks

Related questions

Q: answer to below Question

A: The debt-to-equity ratio is calculated as follows:Debt-to-Equity Ratio = Total Liabilities / Total…

Q: Units of production data for the two departments of Pacific Cable and Wire Company for November of…

A: b). Winding DepartmentDirect Materials and Conversion Equivalent…

Q: None

A: Following the basic accounting equation of Assets = Liability + Equity, only a, b, and d are…

Q: Do fast answer of this general accounting question

A: To calculate the dividend yield and capital gains yield, we use the following formulas:Dividend…

Q: The Boxwood Company sells blankets for $60 each. It has no beginning inventory on May 1. Assuming…

A: To determine the ending inventory value for the month of May using the FIFO (First-In, First-Out)…

Q: Question

A: Explanation of Contribution Margin: Contribution margin is the difference between the selling price…

Q: A company is analyzing its break-even point for a product with a selling price of $63 per unit. The…

A: Concept of Contribution Margin: The contribution margin is the difference between the selling price…

Q: Choose correct option in this account query.

A: Step 1: Key InformationBeginning Inventory:Units: 750Materials Cost: $7,800 (60% complete)Conversion…

Q: General Accounting question

A: Step 1: Define Dividend YieldThe dividend yield is a financial ratio used by investors to evaluate…

Q: Financial accounting

A: Step 1: Define Net IncomeNet income is the income that is left after accounting for all operating as…

Q: Don't use ai given answer accounting questions

A: Step 1: Definition of Re-order Point (R)The re-order point is the inventory level at which a new…

Q: Question: Quill Corp. shows the following information on its 2007 income statement: Sales $145,000…

A: I hope you are finding the material engaging and informative. If you have any questions or…

Q: Please post. General Account

A: Step 1: Identify the variable manufacturing costs per unit Step 2: Add the variable manufacturing…

Q: Subject: financial accounting

A: Silk corporationPartial Statement of Comprehensive IncomeaIncome Before Income Taxes $457,000…

Q: Kindly help me with accounting questions

A: Step 1: Identify indirect manufacturing costsStep 2: Exclude direct costs (e.g., direct materials,…

Q: What is the original cost of machinery?

A: Step 1: Define DepreciationDepreciation is the non-cash expense charged in the income statement to…

Q: I need answer of this accounting questions

A: Interest revenue = Principal x Annual interest rate x Period 2024 = 6 months (July 1 - December 31,…

Q: Prepare the appropriate journal entry to record Lance's income tax provision for 2016.

A: To prepare the journal entry for Lance's income tax provision for 2016, we need to consider both…

Q: Give me correct answer this general accounting question

A: Step 1: Define Stockholders' EquityStockholders' equity represents the residual interest in a…

Q: The following information is available for... Please provide answer the accounting question

A: Step 1: Identify the Return on Equity (ROE) Formula Step 2: Calculate Average Stockholders' Equity…

Q: Quick answer of this accounting questions

A: Step 1: Definition of Interest RevenueInterest revenue represents the income earned from lending…

Q: uses the weighted-average method of accounting for units and costs.

A: `Step 1: Key DataUnits Flow:Work in Process (WIP), October 1: 50,000 unitsUnits Started: 396,000…

Q: Hamilton corp issued a long term bond... Please answer the financial accounting question

A: Step 1: Given Value for calculation Bond Interest Rate = 9%Average Expected annual Inflation Rate =…

Q: Do fast answer of this question solution general accounting

A: Step 1: Definition of Direct Labor Cost BudgetThe direct labor cost budget is the total cost of…

Q: Need help this question general accounting

A: Step 1: Define Corporate Income TaxA tax levied on the profit earned by the corporation in a year is…

Q: What was upper crust cash flow from operations for 2015 on these general accounting question?

A: Step 1: Define Cash Flow from OperationsCash flow from operations refers to the net cash generated…

Q: What is the value of its total assets?

A: Step 1: Definition of the Accounting EquationThe accounting equation is a fundamental principle in…

Q: I want answer to this accounting question

A: Explanation of Net Income:Net income is the total profit earned by a company during a specific…

Q: The operating income using variable costing is: $_____. Financial Account

A: Step 1: Identify Relevant DataUnits Produced: 10,000Units Sold: 8,000Selling Price per Unit:…

Q: Compute production cost per unit, under variable costing.

A: Compute the production cost per unit under variable costing, we include only the variable costs…

Q: Cost account.

A: To calculate the equivalent units of production (EUP) for both the Drawing Department and the…

Q: Quick answer of this accounting questions

A: Step 1: Definition of Owners' EquityOwners' Equity represents the residual interest in the assets of…

Q: Please provide correct answer general Accounting

A: Step 1: Define Cash Flow StatementThe cash flow statement is drafted to analyze the inflows and…

Q: how much is the expected total variable cost on the August budget?

A: To calculate the expected total variable cost for August, we consider materials and labor as…

Q: None

A: Equity Multiplier = 1/EquityEquity Multiplier = 1/(2/3)Equity Multiplier = 1.5 Net Profit Margin =…

Q: Get correct answer general accounting question

A: Explanation: In the given case, we are required to calculate the monthly payment if the purchase of…

Q: Hii expert please given correct answer general accounting question

A: Step 1: Define Cash Flow From AssetsCash flow from assets refers to the cash that flows in or out of…

Q: Subject:- General Account.

A: To calculate the inventory purchases, we use the inventory accounting equation: Beginning…

Q: General Accounting question

A: Step 1: Define Corporate Tax PayableCorporate tax payable is the amount of money a corporation owes…

Q: Please provide this question solution general accounting

A: Explanation: The question requires us to calculate the gross and after-tax return of Sarah from the…

Q: Contribution margin ratio

A: Step 1: Definition of Contribution Margin RatioThe Contribution Margin Ratio is the percentage of…

Q: The total job cost for job p951 ???

A: Step 1: Define Total Job CostThe total job cost in job-order costing refers to the sum of the direct…

Q: What is the economic order quantity of this accounting question?

A: The EOQ is a very important concept in the management of inventory. It refers to the optimum number…

Q: Need help with this accounting questions

A: Step 1: Definition of the Gross Profit MethodThe gross profit method estimates ending inventory by…

Q: Please need help with this financial accounting question

A: Step 1: Definition of Gross and After-Tax ReturnGross Return: Total return from an investment,…

Q: Assets turnover??

A: Step 1: Define Asset TurnoverTotal asset turnover represents the ability of a company to use…

Q: The methods of accounting for a lease by the lessor are:

A: The correct answer is:a. operating and finance lease method. Explanation:The lessor accounts for…

Q: Calculate the return on assets for the period

A: Step 1: Definition of Return on Assets (ROA)Return on Assets (ROA) is a financial ratio that…

Q: If a business has a net income of $44,700 and total equity of $111,750, what is the ROE? a.10% b.…

A: Explanation of Net Income:Net income is the profit a business earns after all expenses, taxes, and…

Q: Kindly help me with general accounting question

A: Step 1: Define PurchasesPurchases refer to the activity of acquiring goods and services with the…

Question

Please provide solution this financial accounting question

GM has a book value of $8 billion of equity and a face value
of $12 billion of debt. What are the weights in equity and debt
that are used for calculating the WACC?
a. 0.4, 0.6.
b. 0.6, 0.4.
c. cannot be determined.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

A firm has a debt-to-equity ratio of 0.60 and a market-to-book ratio of 4.0. What is the ratio of the book value of debt to the market value of equity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
what is the debt to equity ratio if the WACC is0.083 the cost of debt is 0.055 and the cost of equity is 0.15 what is the weight of debt what is the weight of equity
How do you determine the mix (percentages or weights) of debt vs equity from the Debt to Equity (D/E) Ratio? For example, if a company has a D/E Ratio = .667, what is the percentage of debt, of equity? For example, if a company has a D/E Ratio = 1, what is the percentage of debt, of equity? For example, if a company has a D/E Ratio = 1.5, what is the percentage of debt, of equity?
A firm has a debt-to-equity ratio of 0.5 and a market-to-book ratio of 2. What is the ratio of the book value of debt to the market value of equity? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Book debt-to-market equity ratio
Mobius, Incorporated, has a total debt ratio of .61. a. What is its debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is its equity multiplier? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Mobius, Incorporated, has a total debt ratio of .10. A) What is the debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places. B) What is its equity multiplier? Note: Do not round intermediate calculations and round your answer to 2 decimal places.
Need help with this financial accounting question
Bello, Inc., has a total debt ratio of .51. a. What is its debt-equity ratto? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is Its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Debt-equity ratio b. Equity multiplier times times
Queen, Inc., has a total debt ratio of .46. a. What is its debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
3. The following is known about a company and a financial market: company: Be = 1.2, ra = 0.0,6, D/E = 1, tax = 0.4 financial market: rf = 0.04, rm = 0.1 (a) Assuming that the Modigliani - Miller assumptions hold, i.e. that debt is pr mined and permanent, calculate re, ra, Ba, Ba and WACC. (b) Assuming that debt is rebalanced, calculate re, ra, Ba, Ba and WACC. (c) Explain the differences between part (a) and part (b).
Assume the total market value of General Motors (GM)’s capital structure is $10 billion. GM has a market value of $6 billion of equity and a face value of $12 billion of debt. What are the weights in equity and debt that are used for calculating the WACC? A. 0.30 equity, 0.70 debt B. 0.60 equity, 0.40 debt C. 0.40 equity, 0.60 debt D. Cannot be determined
A firm has a debt -to -equity of 0.69 and a market -to- book ratio of 3.0. What is the ratio of the book value of debt to the market value of equity