On the basis of this information, NUBD's weighted-average cost of capital is: (round-off to 2 decimal places The following information relates to the X Division of NUBD Co:Interest rate on debt capital: 8%Cost of equity capital: 12%Market value of debt capital: P70 millionMarket value of equity capital: P80 millionIncome tax rate: 30%

After tax cost of debt = Pretax cost of debt * (1 - tax rate) = 8% * (1-30%) =0.056 = 5.6%

Answered: The following information relates to…

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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One should determine the after-tax weighted average cost of capital by Multiple Choice A) dividing the weighted average before-tax cost of debt to the weighted average cost of equity. B) adding the weighted average before-tax cost of debt to the weighted average cost of equity. C) adding the weighted average after-tax cost of debt to the weighted average cost of equity. D) multiplying the weighted average after-tax cost of debt by the weighted average cost of equity.
3. If a capital investment is $28,752.7 and equal annual cash inflows are 69,943.5, state the internal rate of return factor rounded to two decimal places.
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REQUIRED Study the information given below and answer the following questions: 1. Calculate the Payback Period (expressed in years, months and days). 2. Calculate the Accounting Rate of Return on average investment (expressed to two decimal places). 3. Identify TWO (2) reasons why Umdloti Limited should not use the accounting rate of return to evaluate capital investments. 4. Calculate the Net Present Value. 5. Calculate the Internal Rate of Return (expressed to two decimal places) if the net cash flows are R320 000 per year for five years. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation.
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Suppose that there is a constant technological progress (A) and population growth (n) in a sample economy. Production function is given as Y, = F(Kt, N¿) = A/K/N. a) Write the output per worker as a function of capital per worker.
(b) Find the time path of capital K(t) given the following rates of net investment flow functions (i) I(t) = 10t2 +5 K(0) = 50 (ii) I(t) = 18t5 - 2 K(0) = 24 (iii) I(t) = 30t4 K(0) = 35 %3D (iv) I(t) = 23t K(0) =15
Round to four decimal places.
2. Interpret each notation or formulas those are shown in the table below and used in economic appratisal proces s: Factor by which to Multiply "Given Factor Functional To Find: Given: Symbolb Factor Name For single cash flows: (1 + i)N F Single payment compound (F/P,i%, N) amount Single payment present (P/F,i%, N) worth For uniform series (anruities): F A (14N Uniform series compound (F/A,i%,N) amount Uniform series present worth (P/A, i%, N) A Sinking fund (A/F,i%, N) (1+i-1 Capital recovery (A/P,i%,N) (14N -1
For the arithmatic gradient of cash flow given below, if G= $150 , the value at year 23(V23) is:
Refers to the capital recovery factor O (F/A,i,n) O (P/A,i,n) O (A/F,i,n) O (A/Pi,n)

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The following information relates to the X Division of NUBD Co: Interest rate on debt capital: 8% Cost of equity capital: 12% Market value of debt capital: P70 million Market value of equity capital: P80 million Income tax rate: 30%