Company A’s balance sheet showed current assets of $5,000,000


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Company A’s balance sheet showed current assets of $5,000,000 and current liabilities of $3,000,000 before the following events. The Company refinanced a note due in 3 months with another note due in 4 years. The amount of the note is $500,000 The Company determined that $200,000 of accounts receivable will have to be written off. The Company leased a piece of equipment.  The equipment cost $1,000,000 with annual equal payments of $50,000. Goodwill of $100,000 was deemed to be impaired and was written off. Compute working capital.  Show calculations. A Company is considering purchasing a piece of new equipment for $1,000,000.  The equipment will reduce cost by $280,000 (assume the savings occurs at the end of the year) per year for 5 years.  At that time the salvage value of the equipment is $50,000.  Current cash inflow for is $1,200,000.  The Company requires a 6% ROI.Assume: A Company has a targeted capital structure of 30% for debt, 10% for preferred stock and 60% for common equity.  Before tax cost of debt is 11%, cost of preferred stock is 10.3% and the cost of common equity is 14.6%.  A Company’s tax rate is 40% What is A Company’s WACC?  Show all calculations DoctorBravo007
posted a question · Feb 19, 2016 at 8:47pm

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