Given the Following Data for Vinyard Corporation

question 20

Multiple Choice

Given the following data for Vinyard Corporation:

Calculate the proportions of debt (D/V) and equity (E/V) for the firm that you would use for estimating the weighted average cost of capital (WACC) :

• A) 40% debt and 60% equity
• B) 50% debt and 50% equity
• C) 25% debt and 75% equity
• D) none of the given values

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Definitions:

Assets

Resources controlled by a business due to past transactions or events, from which future economic benefits are expected to flow to the entity.

Accounts Receivable

Accounts Receivable are amounts owed to a company by customers for goods or services delivered on credit, expected to be collected as cash.

Notes Payable

A written agreement to pay a specific amount to a lender at a future date, typically including interest payments, classified as a liability on the balance sheet.

Ending Equity

The total value of all ownership interests in the company at the end of the accounting period, after all revenues and expenses are accounted for.