Corporation X needs $1,000,000 and can raise this through debt at an annual rate of 6 percent, or preferred stock at an annual cost of 8 percent. If the corporation has a 21 percent tax rate, the after-tax cost of each is ________.
Q: WACCSuppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its…
A: The provided information are: Weight of equity in capital structure (WE)= 78% = 0.78 Weight of debt…
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A: Income tax: Income tax can be defined as the charges applied by the government on the income earned…
Q: Suppose that TapDance, Inc.’s capital structure features 65 percent equity, 35 percent debt, and…
A: WACC = (Weight of common stock * Cost of common equity) + [Weight of debt * Pretax cost of debt(1 -…
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A: In the given case, the long term capital gains are treated as short term capital gains as there is…
Q: For its current tax year, Ilex Corporation has ordinary income of $250,000, a short-term capital…
A: As it is given in the question, Prior to 2018, the U.S. corporate tax rate structure had eight tax…
Q: What is the company's federal income tax bill for the year? Enter your answer in dollars. For…
A: Federal Tax rate = 21% Taxable Income = $45 million Interest Income = $1 million
Q: The federal corporate income tax rate is 35 percent and firms may carry-back losses for two years…
A:
Q: Almond, Inc has determined the cost of each of its sources of capital and the desired weighting in…
A: Wacc is weighted average of cost of each financing security
Q: he Wendt Corporation reported $45 million of taxable income. Its federal tax rate was 21% (ignore…
A: The amount of income needed to determine the taxes owing by an individual or a business is referred…
Q: For which capital component must you make a tax adjustment when calculating a firm’s weighted…
A: WACC or weighted average cost of capital is the proportionate cost of all financing resources…
Q: Company C has a capital structure consisting of 60% equity and 40% debt. The before-tax cost of…
A: The weighted average cost of capital (WACC) is a computation of a company's cost of capital wherein…
Q: If a corporation has an average tax rate of 40 percent, the approximate annual, after-tax cost of…
A: After tax cost of debt is the cost which the bondholder expects after adjusting for taxes.
Q: Suppose that TipsNToes, Inc.'s capital structure features 75 percent equity, 25 percent debt, and…
A: After tax cost of debt = Before tax cost * (1 - tax rate) = 10%*(1-.20) = .08 = 8% Cost of equity…
Q: For which capital component must you make a tax adjustment when calculating a firm's weighted…
A: In the given question we have three sub parts and we need to answer them one by one.
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A: Given information is: Your client, Heron Corporation, has a deficit in accumulated E & P of…
Q: A Corporation is planning to loan P20M at an effective interest rate of 10%. The company pays income…
A: Loan amount = P20,000,000 Interest rate = 10% Tax rate = 30%
Q: Berry Co/ provides an incentive compensation plan under which its president receives a bonus equal…
A: The bonus amount is 20% of after tax and bonus amount. The following formula would be applied to get…
Q: Suppose that JB Cos. has a capital structure of 75 percent equity, 25 percent debt, and that its…
A: WACC is weighted Average cost of Capital shows the average cost of Capital obtained from the all…
Q: Corporation's after−tax cost of debt is
A: Given information is: Times Corporation, whose tax rate is 30%, has two sources of funds:…
Q: pected to generate net income of $40 million next year and will pay $20 in after tax interest…
A: The current value of a future sum of money or stream of cash flows, given a specified rate of…
Q: The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion…
A: The question is related to MM Approach. As per Miller & Modigliani there are two types of firm…
Q: Poly is planning for P5 million in capital expenditures next year. Poly’s target capital structure…
A: Formula: Dividend payout ratio = ( Total Dividends - Amount spent for capex ) / Net income
Q: Suppose that TipsNToes, Inc.'s capital structure features 75 percent common equity, 25 percent debt,…
A: Equity ratio = 75% Debt ratio = 25% Cost of equity = 12% Before tax cost of debt = 10% Tax rate =…
Q: The company requires P1,000,000 for its proposed plan. The following financial alternatives are…
A: Data given: i) Plan I: 100% Equity Capital (Face Value P100)ii) Plan III: 50% Equity Capital (Face…
Q: Suppose that TapDance, Inc.'s capital structure features 60 percent equity, 40 percent debt, and…
A: Equity ratio = 60% Debt ratio = 40% Cost of equity = 11% Before tax cost of debt = 6% Tax rate = 21%…
Q: rm Z, a corporation with a 21 percent tax rate, has $100,000 to invest in year 0 and two investment…
A: In decision making process, the investment with higher Net Present Value is selected.
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A: Here, Corporation is going to issue bonds to an investment company. Amount received from the company…
Q: Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred…
A: WACC refers to a firm's weighted average cost of capital. It is the rate that a firm pays to its…
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A: Given Data: Investment = $372,000 Return % = 12% So EBIT = 12% * $372,000 =…
Q: Suppose that TipsNToes, Inc.'s capital structure features 55 percent common equity, 45 percent debt…
A: Weight of common equity = 0.55 Weight of debt = 0.45 Cost of equity = 0.14 Before tax cost of debt =…
Q: Wilmore Company Limited is a levered entity with percentage of debt out of total capital being 40%.…
A: The cost of debt is the effective interest rate a company pays on its debt.
Q: Assume that Provident Health System, a for-profit hospital, has $1 million in tax-able income for…
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Q: The Shrives Corporation has $10,000 that it plans to invest in marketable securities. It is choosing…
A: The debt instrument in which the company is required to pay the interest even in the year of losses…
Q: WACC
A: Computation of WACC WACC is 10.106%. (Please refer the working note in step 2) Formula for WACC…
Q: Value of tax shield
A: Tax Shield is the deduction in the taxable income due to deductible expenses. Normally tax shield is…
Q: Suppose that T-shirts, Incorporated's capital structure features 25 percent equity, 75 percent debt,…
A: Given, Equity = 25% Debt = 75% Before tax cost of debt = 8% Cost of equity = 12% Tax rate = 21%
Q: Paris Corporation holds a $100,000 unrealized net capital gain and a capital loss carryforward that…
A: A net capital loss is carried forward until the whole amount is exhausted.
Q: Suppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and…
A: FORMULA OF WACC: WACC=WE×RE+WP×RP+WD×RD×1-TAX where, WE=weight of equityWD=weight of debtWP=weight…
Q: a calendar-year C Corporation, is considering investing in a business expenditure with a cost of…
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Q: The company requires P1,000,000 for its proposed plan. The following financial alternatives are…
A: Given, Plan 1 has 100% equity capital Plan III has 50% equity capital and 50% preference capital
Corporation X needs $1,000,000 and can raise this through debt at an annual rate of 6 percent, or
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- If a company earns $48,000 income on a municipal bond and the tax rate is 20%, Income tax expense would exceed income taxes to pay by 48,000 x .20 Income tax expense would be less than income taxes to pay by 48,000 x .20 The current portion of income taxes would exceed income tax expense by $48,000. Income tax expense would equal income taxes to pay.Assume that Provident Health System, a for-profit hospital, has $1 million in tax-able income for 2020, and its tax rate is 30 percent (combined federal and state tax rates). Given this information, what is the firm’s net income? Suppose the hospital pays out $300,000 in dividends. A shareholder, Carl Wu, receives $10,000. If Carl’s initially paid $100,000 for his shares and faces a tax rate on dividends of 15 percent, what is his after-tax dividend and after-tax rate of return on his investment. Suppose that Aditi Patel currently holds tax-exempt bonds of Good Samaritan Healthcare that pay 7 percent interest. She is in the 40 percent tax bracket. Her broker wants her to buy some Beverly Enterprises taxable bonds that will be issued next week. With all else the same, what rate must be set on the Beverly bonds to make Aditi interested in making a switch? Due date is midnight of day 7. Your submission can be made in WORD or EXCEL. Clearly show your work and provide a concise…Silver Corporation has the following liabilities and equity balances. <See image attached.> If it is taxed at 25%, what is the weighted average cost of capital?
- Suppose that JB Cos. has a capital structure of 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 11 percent while its cost of equity is 15 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield.What will be JB’s WACC? (Round your answer to 2 decimal places.)Rhodes Corporation’s financial statements are shown after part f. Suppose the federalplus- state tax corporate tax is 25%. Answer the following questions.a. What is the net operating profit after taxes (NOPAT) for 2020?b. What are the amounts of net operating working capital for both years?c. What are the amounts of total net operating capital for both years?d. What is the free cash flow for 2020?e. What is the ROIC for 2020?f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.)Kelly Corporation is considering the issuance of either debt or preferred stock to finance the purchase of a facility costing P1.5 million. The interest rate on the debt is 16 percent. Preferred stock has a dividend rate of 12 percent. The tax rate is 46 percent. REQUIREMENTS: 1. What is the annual interest payment? 2. What is the annual dividend payment? 3. What is the required income before interest and taxes to satisfy the dividend requirement??
- Suppose that TapDance, Inc.’s capital structure features 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 14 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance’s WACC? (Round your answer to 2 decimal places.)Suppose that TipsNToes, Inc.'s capital structure features 75 percent equity, 25 percent debt, and its cost of equity is 12 percent, while its before-tax cost of debt is 10 percent. If the appropriate weighted average tax rate is 20 percent, what will be TipsNToes's after-tax WACC?Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 12 percent while its cost of equity is 16 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB’s WACC? (Round your answer to 2 decimal places.)
- Suppose that Tap Dance, Inc.'s capital structure features 70 percent equity, 30 percent debt, and that its before-tax cost of debt is 7 percent, while its cost of equity is 12 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance's WACC? (Round your answer to 2 decimal places.)Suppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)Rhodes Corporations financial statements are shown after part f. Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. a. What is the net operating profit after taxes (NOPAT) for 2020? b. What are the amounts of net operating working capital for both years? c. What are the amounts of total net operating capital for both years? d. What is the free cash flow for 2020? e. What is the ROIC for 2020? f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
