Abc co. and xyz co. are identical firms in all respects except for their capital structure. abc is all equity financed with $550,000 in stock. xyz uses both stock and perpetual debt; its stock is worth $275,000 and the interest rate on its debt is 10 percent. both firms expect ebit to be $59,000. ignore taxes. a. rico owns $33,000 worth of xyz’s stock. what rate of return is he expecting? (round your answer to 2 decimal places. (e. g., 32.16)) rate of return % b. suppose rico invests in abc co and uses homemade leverage. calculate his total cash flow and rate of return. (round your percentage answer to 2 decimal places. (e. g., 32.16)) total cash flow $ rate of return %c. what is the cost of equity for abc and xyz? (round your answers to 2 decimal places. (e. g., 32.16)) cost of equity abc % xyz % d. what is the wacc for abc and xyz? (round your answers to 2 decimal places. (e. g., 32.16)) wacc abc % xyz %

8. agreement and disagreement among economists suppose that bob, an economist from a university in arizona, and cho, an economist from a public television program, are arguing over saving incentives. the following dialogue shows an excerpt from their debate: cho: i think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain an improvement in living standards. bob: i think a switch from the income tax to a consumption tax would bring growth in living standards. cho: you really think households would change their saving behavior enough in response to this to make a difference? because i don't. the disagreement between these economists is most likely due to . despite their differences, with which proposition are two economists chosen at random most likely to agree? rent ceilings reduce the quantity and quality of available housing. immigrants receive more in government benefits than they contribute in taxes. having a single income tax rate would improve economic performance.

Mae jong corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. the market rate of interest on similar bonds is 12%. interest is payable annually on december 31, and the bonds were issued for total proceeds of $1,000,000. in accounting for these bonds, mae jong corp. will: (a) first assign a value to the equity component, then determine the liability component. (b) assign no value to the equity component since the conversion privilege is not separable from the bond.(c) first assign a value to the liability component based on the face amount of the bond.(d) use the “with-and-without” method to value the compound instrument.

Compute the cost of not taking the following cash discounts. (use a 360-day year. do not round intermediate calculations. input your final answers as a percent rounded to 2 decimal places.)