Cost of Equity from retained earnings =D1/P0+g =0.67/45+8%
=9.49% (Option a is correct option)
Option c is correct option. Account payable is not included in
calculation of WACC
Assume that you are a consultant to Broske Inc., and you have been provided with the...
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $2.10; P0 = $49.50; and g = 6.00% (constant). What is the cost of equity from retained earnings based on the DCF approach? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67; P0 = $47.50; and g = 8.00% (constant). What is the cost of equity from retained earnings?
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: The company pays a fixed annual dividend of $4.8 per share and its current stock price is $50. The company is operating in a mature industry and not expected to grow at all. What is the cost of equity for the company?
Assume that GBIST Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $1.20; P0 = $1,200.00; and g = 6.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
You were hired as a consultant to Gambino Company, whose target capital structure is 60% debt, 15% preferred, and 25% common equity. The before-tax cost of debt is 8.00%, the cost of preferred is 7.02%, and the cost of retained earnings is 15.75%. The firm will not be issuing any new stock. What is its WACC? State in percentage terms without the percent sign symbol and round to the second decimal place. (Thus, 12.98756% would be written as 12.99 to...
Rivoli Inc. hired you as a consultant to help estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings? Answer 10.69% 11.25% 11.84% 12.43% 13.05%
You are an assistant to the CFO and have collected the following data to conduct the analysis. The company is subjected to a marginal tax rate of 35%. The company can issue a 20-year, 7.6% semi-annual coupon bond at $1,219. New bonds would be privately placed with no floatation cost. The company’s preferred stock currently sells for $30 per share. It pays a fixed dividend of $1.8 per share. The company’s common stock currently sells for $40 per share. The...
You are an assistant to the CFO and have collected the following data to conduct the analysis. The company is subjected to a marginal tax rate of 35%. The company can issue a 20-year, 7.6% semi-annual coupon bond at $1,219. New bonds would be privately placed with no floatation cost. The company’s preferred stock currently sells for $30 per share. It pays a fixed dividend of $1.8 per share. The company’s common stock currently sells for $40 per share. The...
1.What is (WACC), why is it used? 2. Why the weighted average cost of capital (WACC) is used in capital budgeting? 3. Estimating the costs of different capital components—debt, preferred stock, retained earnings, and common stock? 4. How to combine the different component costs to determine the firm’s WACC? 5. Cost of Equity: CAPM, what is it used for?
Exhibit 10.1 Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current assets Net plant, property, and equipment Total assets $38,000,000 $101,000,000 $139,000,000 Liabilities and Equity Accounts payable Accruals Current liabilities Long-term debt (40,000 bonds, $1,000 par value) Total liabilities Common stock (10,000,000...