Rogers’ Rotors has debt with a market value of $250,000, preferred stock with a market value of $50,000, and common stock with a market value of $750,000. If debt has a cost of 7%, preferred stock a cost of 9%, common stock a cost of 13%, and the firm has a tax rate of 30%, what is the WACC?
Q: a. The after-tax cost of debt using the approximation formula is______%.(Round to two…
A: Here, To Find: Part A. The after-tax cost of debt using the approximation formula =? Part B. WACC…
Q: TRY Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is…
A:
Q: Majan Mining has found that its cost of common equity capital is 15 percent and its cost of debt…
A: Cost of Equity Capital = 15% Cost of Debt = 12% Tax Rate = 35% After tax cost of debt = Cost of Debt…
Q: The total book value of WTC’s equity is $10 million, and book value per share is $16. The stock has…
A: we need market value of equity and bonds to find WACC so, market value of share / 16(book value of…
Q: Purple Inc. has 10 million shares outstanding, now trading at £75 per share. It has also issued £200…
A: WACC is the weighted average of cost of sources of finance weighting as per their market values.
Q: APT Ltd has debt with a market value of $350,000, preferred stock with a market value of $150,000,…
A: Cost of debt = Interest rate * (1-tax) Cost of debt = 0.08*(1-0.30) = 0.056 or 5.6% cost of…
Q: Baker Industries’s net income is $24,000, its interest expense is $5,000, andits tax rate is 40%.…
A: NET INCOME $ 24,000.00 COMMON EQUITY $ 250,000.00 INTEREST EXPENSES $ 5,000.00…
Q: Chamin, Inc. has earnings before interest and taxes (EBIT) of $375,000. Chamin has interest expense…
A: The degree of financial leverage shows the effect of fixed financial costs on the earnings of the…
Q: the kosol co. can raise $200,000 by (1) selling 1,000 shares of common stock at $200 each or (2)…
A: Alternate 1: Debt = $200,000 Interest Rate = 7% Interest Amount = $200,000 × 7% = $14,000 Existing…
Q: Serenity Systems Inc. is expected to pay a $2.50 dividend at year end (D, = $2.50), the dividend is…
A: The weighted average cost of capital is the weighted average of the cost of equity, cost of debt and…
Q: Percy Motors has a target capital structure of 40 percent debt and 60 percent common equity, with no…
A: The term capital structure refers to the structure of debt and equity financing in the company. A…
Q: The Very Big Corporation needs to net $10,000,000 from the sale of common stock. Its investment…
A: Firm is required to issue sufficient shares so that the issue proceeds can provide, the required…
Q: Capital Co. has a capital structure, based on current market values, that consist of 50% debt, 10%…
A:
Q: The W.C. Pruett Corp. has $600,000 of interest-bearing debt outstanding,and it pays an annual…
A: Given, The W.C. Pruett Corp. has $600,000 of interest-bearing debt outstanding,and it pays an annual…
Q: A construction company has asked its chief financial officer to measure the cost of each specific…
A: Every business firm requires capital and finance for its development, growth, and operations. Some…
Q: KN Stitches has debt of $26,000, a leveraged value of $78,400, a pretax cost of debt of 7.05…
A: WACC formula: WACC=WE×KE+WD×KD×1-TAXWHERE,WE=WEIGHT OF EQUITYWD=WEIGHT OF DEBTKE=COST OF…
Q: The ABC corp. is expected to have the earnings before interest and taxes of $60,000 and the…
A: EBIT= $60,000 Unlevered Cost of capital (Vu)= 12% Tax rate= 30% Debt value= $20,000 Annual coupon…
Q: Outlet has an unlevered cost of capital of 14.2 percent, a tax rate of 35 percent, and expected…
A: Value of Unlevered Firm = EBIT*(1-tax rate)/unlevered cost of capital = [23400*(1-35%)]/14.2% =$…
Q: The ABC corp. is expected to have the earnings before interest and taxes of $60,000 and the…
A: Value of Unlevered firm (Vu)Vu=EBIT1-TRu where T= Tax rate, Ru=Unlevered cost of capital Value of…
Q: The ABC corp. is expected to have the earnings before interest and taxes of $60,000 and the…
A: As per MM proportion 2 value of unlevered firm will increase by present value of tax shield provided…
Q: The firm is financed with debt and equity. The book value of the debt is $10,000,000; the book value…
A: Weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…
Q: The Globe Incorporated has EBIT of P20 million for the current year. On the firm balance sheet,…
A: The firm's value is the total market value of debt and the market value of equity components. Given…
Q: A firm has total assets of $1,000,000 and a debt ratio of 30 percent. Currently, it has sales of…
A: Return on equity (ROE):It is a profitability measure that is related with the firm's equity. It is…
Q: wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. the firm…
A: Computation of the weighted average cost of capital:Hence, the weighted average cost of capital is…
Q: The total book value of WTC's equity is $10 million, and book value per share is $20. The stock has…
A: Market to book ratio = 1.5 Book value of equity = $10 Million --------------------------------------…
Q: National Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity…
A: debt-to-equity ratio of 25% means that for every one 1P invested in the company, about 25% come…
Q: ercy Motors has a target capital structure of 40% debt and 60% common equity. The yield to maturity…
A: In this we have to calculate the cost of equity from WACC of company.
Q: Unida Systems has 34 million shares outstanding trading for $8 per share. In addition, Unida has $94…
A: Weighted Average cost of capital Weighted Average overall cost of capital of the firm under which…
Q: Sorenson Systems, Inc. is expected to pay a dividend of $3.30 at year end (D1), the dividend is…
A: Wacc is the weighted average cost of capital
Q: HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 150,000 Preferred…
A: Weighted-average cost of capital is the average cost of capital can be calculated by multiplying the…
Q: Mullineaux Corporation has a target capital structure of 46 percent common stock, 5 percent…
A: Given: Weight of common stock = 46% Preferred stock = 5% Balance of debt = 1-5%-46% = 49% Tax rate =…
Q: The Expanding Capital Corporation has a current capital structure of $15 million in secured bonds…
A: Part (1): Calculation of WACC before the new bond issue: Answer: WACC before the new bond issue is…
Q: You are given the market values of CHAR’s capital structure as follow: $52 million in total common…
A: Total Market value of capital structure = total common equity + debt + preferred stock = 52 + 20 + 8…
Q: HBM, Inc. has the following capital structure: Assets $400,000…
A: a.Calculation of After-tax Cost of Debt:
Q: Gilbert and Sons is a leveraged firm, it has 300,000 shares of stock outstanding with a market price…
A: Computation of debt-equity ratio:
Q: Clive Limited Company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred…
A: WACC is the weighted average cost of capital. It is the overall cost of capital which is used for…
Q: Tee Corp. has a total long term capital of $980,000; of which 400,000 is long-term debt, $80,000 is…
A: common equity = $980,000 - $80,000 - $400,000 common equity= 500,000
Q: Johnson Tire Distributors has debt with both a face and a market value of $90,000,000. This debt has…
A: given information market value = 90,000,000 EBIT = 50,000,000 tax rate = 25% unleavered cost of…
Q: Northern Wood Products is an all-equity firm with 16,000 shares of stock outstanding and a total…
A: Market Price Per Share = Total Market Value/ No. of Shares Outstanding
Q: rage cost of capital. The weighted average cost is to be measured by using the following weights:…
A: Cost of debt is yield to maturity of the stock and after tax cost can be reduced for tax purpose.
Q: Mullineaux Corporation has a target capital structure of 65 percent common stock and 35 percent…
A: WACC = Weight of equity * Cost of equity + Weight of debt * cost of debt * (1-tax rate)
Q: he total book value of WTC’s equity is $7 million, and book value per share is $14. The stock has a…
A: The organization can raise funds for the operation song integrity by issuing common stock, preferred…
Q: Widgets Inc has an expected EBIT of $64,000 in perpetuity and a tax rate of 35 percent. The firm has…
A: The question is based on assumptions of MM proposition I with taxes, the value of firm may increase…
Rogers’ Rotors has debt with a market value of $250,000,
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- . APT Ltd has debt with a market value of $350,000, preferred stock with a market value of $150,000, and common stock with a market value of $450,000. If debt has a cost of 8%, preferred stock a cost of 10%, common stock a cost of 12%, and the firm has a tax rate of 30%, Calculate the WACCA firm is financed 75% by common stock, 9% by preferred stock and 18% by debt. The required return is 11% on the common, 9% on the preferred, and 4% on the debt. If the tax rate is 21% what is the WACC?Pfd Company has debt with a yield to maturity of 7.0%, a cost of equity of 13.0%, and a cost of preferred stock of 9.0%. The market values of its debt, preferred stock, and equity are $10.0 million, $3.0 million, and $15.0 million, respectively, and its tax rate is 40%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pfd's WACC is%. (Round to two decimal places.)
- Ursala, Incorporated, has a target debt-equity ratio of 1.25. Its WACC is 8.4 percent and the tax rate is 23 percent. If the company’s cost of equity is 12.4 percent, what is its pretax cost of debt? If instead you know that the aftertax cost of debt is 3.6 percent, what is the cost of equity?Shaw Communications is currently financed with 30% equity, 10% preferred stock, and 60% debt. It has a cost of equity capital of 11%, a cost of preferred stock of 7.5%, and its pretax cost of debt is 6%. If the firm has a tax rate of 30%, what is Shaw's weighted average cost of capital (WACC) ?Chamin, Inc. has earnings before interest and taxes (EBIT) of $375,000. Chamin has interest expense of $75,000; it must pay preferred dividends of $6,000 and it has a tax rate of 40 percent. Given a base EBIT level of $375,000, what is the firm's degree of financial leverage? Use the formula that includes the preferred dividends in the calculation.
- Company X has debt and equity as sources of funds. Company X has market value of debtas $150,000 and book value of debt as $80,000. The company has book value of equity as$100,000 and market value of equity as $125,000. The cost of debt is 8.25% and cost ofequity is 9.57%. the tax rate is 38%. What is the Weighted Average Cost of Capital(WACC)?a. 7.59%b. 7.78%c. 7.14%d. 7.68%First one is: Hossain Health has a levered cost of equity of 13.84 percent and an unlevered cost of capital of 12.5 percent. The company has $5,000 in debt that is selling at par. The levered value of the firm is $ 14, 600 and the tax rate is 25 percent. What is the pretax cost of debt?Suppose you are estimating the WACC for Columbus Inc. It has the following data from its balance sheet: total debt = $200 million; total equity=$120 million. It has 20 million shares outstanding, and its stock is trading at $32 per share. Your analysis shows that the company's current borrowing rate is 7%, and that the cost of equity is 13%. If the company marginal tax rate is 30%, what is its WACC?
- 1. Pfd Company has debt with a yield to maturity of 7.8%, a cost of equity of 14.2%, and a cost of preferred stock of 9.1%. The market values of its debt, preferred stock, and equity are $14.5 million, $3.5 million, and $16.3 million, respectively, and its tax rate is 25%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pfd's WACC_____%. (Round to two decimal places.)Starset, Incorporated, has a target debt-equity ratio of 0.76. Its WACC is 10.5 percent, and the tax rate is 32 percent. If the company's cost of equity is 14.5 percent, what is the pretax cost of debt? If instead you know that the aftertax cost of debt is 6.7 percent, what is the cost of equity?Company X has debt and equity as source of funds..Company X has market value of debt as $ 150000 and a book value of debt as $ 80000. The company has book value of equity as $ 100000 and market value of equity as $ 125000. The cost of debt is 8.25% and cost of equity is 9.57%. The tax rate is 38%. What is WACC?