Tutor profile: Tanner D.
5x + 6 = -24
x = -6
Subject: Personal Finance
What is an IRA?
IRA is an acronym for Individual Retirement Account — a place to put money away for retirement that will be then invested for you. IRAs can be used in combination with a 401(k) or as an alternative to one if your company doesn’t offer a 401(k). Much like a 401(k), the money is invested across various stock/bond packages that you choose, so that it can grow over time. IRAs do have contribution limits, though: The most you can put into an IRA is $5,500 a year (e.g., $458 a month), or $6,500 if you’re 50 or older.
Google's capital financing structure is as follows: 30% debt, 10% preferred stock, and 60% common stock. Their marginal tax rate is 40%, and the cost of debt to the company is 8%. The cost of preferred stock is 11%. Google recently paid out a dividend of $2.00/share, and their current stock price is listed at $47.00 with growth for the company listed at 5%. Calculate Google's cost of common equity, and then their WACC?
Cost of common equity is .095, or 9.5%. The company's WACC is .0824, or 8.24%.
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