Collins Group
the Collins Group, a Leading Producer of Custom

question 53

Multiple Choice

Collins Group
The Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital.The balance sheet and some other information are provided below.
$\begin{array}{lr}\text { Assets } \\\text { Current assets } & \$ 38,000,000 \\\text { Net plant, property, and equipment } & 101,000,000 \\\text { Total assets } & \$ 139,000,000\\\\\text { Liabilities and Equity }\\\text { Accounts payable } & \$ 10,000,000 \\\text { Accruals } & 9,000,000 \\\text { Current liabilities } & \$ 19,000,000 \\\text { Long-term debt ( } 40,000 \text { bonds, } \$ 1,000 \text { par value) } & 40,000,000 \\\text { Total liabilities } & \$ 59,000,000 \\\text { Common stock (10,000,000 shares) } & 30,000,000 \\\text { Retained earnings } & 50,000,000 \\\text { Total shareholders' equity } & \$ 0,000,000 \\\text { Total liabilities and shareholders' equity } & \$ 139,000,000\end{array}$
The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00.The beta is 1.25, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%.The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years.The firm's tax rate is 25%.
-Refer to the data for the Collins Group.Which of the following is the best estimate for the weight of debt for use in calculating the firm's WACC?

• A) 18.67%
• B) 19.60%
• C) 20.58%
• D) 21.61%
• E) 22.69%

Recognize the effects of vehicle aerodynamics on braking efficiency.

Comprehend the configuration and necessity of supply tanks in tractor-trailer rigs.

Analyze the implications of system failures on vehicle braking and safety.

Explain various severe braking scenarios and their consequences, such as jackknife and trailer swing.

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Definitions:

Chi-square Test

A chi-square test is a statistical test used to determine if there is a significant difference between the expected frequencies and the observed frequencies in one or more categories.

Expected Frequencies

In statistics, these refer to the counts predicted by a probability model or hypothesis, used especially in the context of chi-squared tests.

Multinomial Experiment

An experiment that can result in one of more than two possible outcomes, where each outcome has a specific probability.

Binomial Experiment

A statistical experiment that has exactly two possible outcomes for each trial and a fixed number of trials.