West Oil Company, LLC has three long
term loans (interest bearing debt): loan #1 with a...
West Oil Company, LLC has three long
term loans (interest bearing debt): loan #1 with a balance of
$300,000 at 8% interest; loan #2 with a balance of $400,000 at 5%
interest, and loan #3 with a balance of $100,000 at 10% interest.
The company has accounts payable of $70,000 (non-interest bearing)
and equity of $1,200,000. It estimates that its cost of equity is
11%. Its tax rate is 34%
1. What is the company’s weighted average cost of capital...
Accounts payable-trade .......4,350,00
Accounts receivable-trade ......3,100,00
Bank loan, short-term borrowings..... 1,500,000
Processing formulas ......300,000
Land held...
Accounts payable-trade .......4,350,00
Accounts receivable-trade ......3,100,00
Bank loan, short-term borrowings..... 1,500,000
Processing formulas ......300,000
Land held for speculation...... 2,500,000
Land ......5,000,000
Change fund .....30,000
Prepaid advertising ......80,000
Unused office supplies .......20,000
Notes payable-trade ......2,500,000
Notes receivable ........1,000,000
Copyright ........300,000
Tools...... 100,000
Building...... 8,000,000
Machinery...... 5,000,000
Office furniture...... 1,800,000
Computer software ......500,000
Bonds payable .......5,000,000
Time deposit due december 31, 2023...... 5,000,000
Premium on bonds payable..... 500,000
Cash in PNB#001 .......2,300,000
Cash in PNB#002 .......(150,000)
Jenny, capital..... 17,880,000
Accumulates depreciation, building..........
Slick Enterprises has the following capital structure: Loans, 9%
$100,000 Loans, 12% 100,000 Accounts payable 200,000...
Slick Enterprises has the following capital structure: Loans, 9%
$100,000 Loans, 12% 100,000 Accounts payable 200,000 Mortgage, 8%
400,000 -------- Total liabilities $800,000 Common stock 100,000
-------- Total liability & equity $900,000 Accounts payable
that are over 30 days old incur a cost of 1.5% per month. About
half the accounts are older than 30 days. Common stock has a market
price of $15 and earnings per share of $3.50 after taxes, of which
$1.50 is paid as dividends. (a)...
On January 1, 2007, Chain Corporation issued $5 million of 7%
coupon bonds at par. The...
On January 1, 2007, Chain Corporation issued $5 million of 7%
coupon bonds at par. The bonds mature in 20 years and pay interest
semiannually on June 30 and December 31 of each year. On December
31, 2017, the market interest rate for bonds of similar risk was
14%, and the market value of Chain Corporation bonds (after the
December 31 interest payment) was $3,146,052. Although the
company’s books are not yet closed for the year, a preliminary
estimate shows...
1. The following
financial statement data pertains to Halsey, Inc
Total Assets
$195,245
Interest-Bearing Debt
$85,680...
1. The following
financial statement data pertains to Halsey, Inc
Total Assets
$195,245
Interest-Bearing Debt
$85,680
Average borrowing cost
11.25%
Common Equity:
Book Value
$42,154
Market Value
$135,849
Marginal Income Tax Rate
37%
Market Equity Beta
0.9
Expected Market Premium
7.50%
Risk-free interest rate
4.70%
a.
Calculate the company's cost of equity
capital.
11%
b.
Calculate the weight on debt capital that should be
used to determine Halsey’s weighted-average cost of capital.
c.
Calculate the weight on equity capital that...
On December 31, 2019, Bang Corporation borrowed $200,000 from
SuperFlash Company and gives SuperFlash a $200,000,...
On December 31, 2019, Bang Corporation borrowed $200,000 from
SuperFlash Company and gives SuperFlash a $200,000, five-year,
non-interest bearing note with a face value of $200,000. The
conditions of the note provide that SuperFlash can rent a warehouse
from Bang Corporation at less than regular market price over the
next five years. Bang normally has to pay an interest rate of 10%
when it borrows money.
Instructions:
a) Prepare Bang’s journal entry to record the receipt of cash,
the note...
On December 31, 2019, Bang Corporation borrowed $200,000 from
SuperFlash Company and gives SuperFlash a $200,000,...
On December 31, 2019, Bang Corporation borrowed $200,000 from
SuperFlash Company and gives SuperFlash a $200,000, five-year,
non-interest bearing note with a face value of $200,000. The
conditions of the note provide that SuperFlash can rent a warehouse
from Bang Corporation at less than regular market price over the
next five years. Bang normally has to pay an interest rate of 10%
when it borrows money. Instructions: a) Prepare Bang’s journal
entry to record the receipt of cash, the note...
On January 1, 2016, the Porter Corporation issued a five-year,
non-interest-bearing, $44,000 note to Longshore Corporation...
On January 1, 2016, the Porter Corporation issued a five-year,
non-interest-bearing, $44,000 note to Longshore Corporation in
exchange for used equipment. Neither the fair market value of the
equipment nor that of the note is determinable. The incremental
borrowing rate of Porter is 12% and the incremental borrowing rate
of Longshore is 10%.
a. Prepare the journal entry to record the issuance of the note
by Porter on January 1, 2016.
b. Prepare the journal entry to record the interest...
The W.C. Pruett Corp. has $300,000 of interest-bearing debt
outstanding, and it pays an annual interest...
The W.C. Pruett Corp. has $300,000 of interest-bearing debt
outstanding, and it pays an annual interest rate of 10%. In
addition, it has $600,000 of common stock on its balance sheet. It
finances with only debt and common equity, so it has no preferred
stock. Its annual sales are $1.92 million, its average tax rate is
40%, and its profit margin is 5%. What are its TIE ratio and its
return on invested capital (ROIC)? Round your answers to two...