ZuoTi.Pro
Question

Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00%...

Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost
Debt 35.00%
Preferred Stock 2.00%
Equity 63.00%
Tax Rate = 35.00% WACC =
Outstanding Bond Preferred Stock Info Common Stock Info
(Annual Coupons) Preferred Divided 3 Current Dividend $2.00
Time to Maturity (years) 10 Current Market Price 50 Current Price $81.00
Coupon Rate APR 6.00% Preferred Yield 6.00% Expected Growth in Dividends 3.00%
Face Value $1,000.00 Expected Return on Equity 5.54%
Current Market Price $975.00
YTM 6.35%

Based on the information in the table, what is the WACC?

5.31%

5.05%

5.16%

4.80%

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

After tax cost of Debt Before tax cost of debt*(1-Tax rate) 0.0635*(1-0.35) 0.041275 4.13% II cost product Debt preference Eq

0 0
Add a comment
Know the answer?
Add Answer to:
Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00%...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00%...

    Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00% Preferred Stock 8.00% Equity 67.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info (Annual Coupons) Preferred Divided 2 Current Dividend $3.00 Time to Maturity (years) 10 Current Market Price 45 Current Price $81.00 Coupon Rate APR 6.00% Preferred Yield 4.44% Expected Growth in Dividends 3.00% Face Value $1,000.00 Expected Return on Equity 6.81% Current Market Price $1,000.00 YTM...

  • please answer Question 3 20 pts LO3 Target% Component ComponentWeighted in Capital Cost (pre- Cost Component...

    please answer Question 3 20 pts LO3 Target% Component ComponentWeighted in Capital Cost (pre- Cost Component Structure tax) (after-tax) Cost 30.00% Debt Preferred Stock 2.00% Equity 68.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info Current Dividend $2.00 (Annual Coupons) Time to Maturity (years) Preferred Divided Current Market Price 10 48 Current Price $81.00 Coupon 6.00% Preferred Yield 4.17% Rate APR Expected Growth in 3.00% Dividends Expected Return on 15.54% Equity Face Value $1,000.00...

  • please answer 20 pts Question 4 LO3 Target % Component Component Weighted in Capital Cost (pre-...

    please answer 20 pts Question 4 LO3 Target % Component Component Weighted in Capital Cost (pre- Cost Structure tax) Component |(after-tax) Cost 25.00% Debt Preferred Stock 8.00% Equity 67.00% 35.00% WACC= Tax Rate = Outstanding Bond Preferred Common Stock Info Stock Info (Annual Preferred 2 Divided Current $3.00 Coupons) Dividend Current Market Time to Current Maturity (years) 45 $81.00 10 Price Price Expected Growth in 3.00% Dividends Preferred Coupon Rate APR 4.44% 6.00% Yield Expected Return on 6.81% Equity Face...

  • Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with...

    Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is Po - $35.00. The last dividend was Do - $3.75, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...

  • Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with...

    Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 11%, and its marginal tax rate is 25%. The current stock price is P0 = $33.00. The last dividend was D0 = $2.00, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC?

  • Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with...

    Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 25%. The current stock price is P0 = $32.50. The last dividend was D0 = $2.00, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? rs = WACC = Banyan Co.’s common stock currently sells for...

  • Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with...

    Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 25%. The current stock price is P0 = $20.50. The last dividend was D0 = $2.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...

  • Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with...

    Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is P0 = $20.00. The last dividend was D0 = $2.00, and it is expected to grow at a 8% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your...

  • COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of 30%...

    COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 40%. The current stock price is P0 = $27.50. The last dividend was D0 = $2.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers to two...

  • Turnbull Co. has a target capital structure of 58% debt, If its current tax rate is...

    Turnbull Co. has a target capital structure of 58% debt, If its current tax rate is 40%, how much higher will 6% preferred stock, and 36% common equity. It has a Turnbull's weighted average cost of capital (WACC) be if before-tax cost of debt of 8.2%, and its cost of preferred it has to raise additional common equity capital by stock is 9.3%. issuing new common stock instead of raising the funds through retained earnings? If Turnbull can raise all...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT