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NEW QUESTION: 1
When confidentiality is the primary concern, and a secure channel for key exchange is not available, which of the following should be used for transmitting company documents?
A. Hashing
B. Symmetric
C. Asymmetric
D. Digital Signature
Answer: C
Explanation:
Asymmetric algorithms use two keys to encrypt and decrypt data. These asymmetric keys are referred to as the public key and the private key. Asymmetric algorithms do not require a secure channel for the initial exchange of secret keys between the parties.
NEW QUESTION: 2
Longstreet Corporation has a target capital structure of 30 percent debt, 50 percent common equity, and
20 percent preferred stock. The tax rate is 30 percent. The company has an optimal capital budget of
$1,500,000. Longstreet will retain $500,000 of after-tax earnings this year. The last dividend was $5, the current stock price is $75, and the growth rate of the company is 10 percent. If the company raises capital through a new equity issuance, then the flotation costs are 10 percent for the first $500,000. If the company issues more than $500,000 in new equity the flotation cost increases to 15 percent. The cost of preferred stock is 9 percent and the cost of debt is 7 percent. (Assume debt and preferred stock have no flotation costs.) What is the weighted average cost of capital at the firm's optimal capital budget?
A. 18.15%
B. 11.94%
C. 12.34%
D. 12.58%
E. 12.18%
Answer: C
Explanation:
Explanation/Reference:
Explanation:
First, calculate the after-tax component cost of debt as 7%(1 - 0.3) = 4.9%. Next, calculate the retained earnings breakpoint as $500,000/0.5 = $1,000,000. Thus, to finance its optimal capital budget, Longstreet must issue some new equity. Note, Longstreet needs $500,000 in financing beyond that which can be supported by retained earnings alone. However, of this additional $500,000, 50% will be new equity and the remaining 50% will represent preferred stock and debt. Thus, Longstreet will issue $250,000 in new equity and flotation costs of 10% will be incurred. The cost of new equity is then[$5(1.10%)/$75(1 - 0.1)] +
10% = 8.15% + 10% = 18.15%. Finally, the WACC = 4.9%(0.3) + 9%(0.2) + 18.15%(0.5) = 12.34%.
NEW QUESTION: 3
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I chuckled with somewhat less amusement.
It can be inferred that the narrator is most concerned with
A. his children.
B. his mansions.
C. himself.
D. Polly.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
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