Pharoah Co. has a capital structure, based on current market values, that consists of 30 percent debt, 5 percent preferred stock, and 65 percent common stock. If the returns required by investors are 12 percent, 13 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Pharoah’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent.
I solved it wrong by doing 30%*12*(1-40%)+13%*12%*+65%*15%=
0.021600 + 0.015600 + 0.097500=
0.1347=13.47%
I am not sure what I am doing wrong. Please show answer with full calculation
WACC = Sum of (weight * cost of capital)
= (0.30 * 12 * (1-0.40) + (0.05 * 13) + (0.65 * 15)
= 2.16% + 0.65% + 9.75%
= 12.56%
After tax WACC = 12.56%
Pharoah Co. has a capital structure, based on current market values, that consists of 30 percent...
Ivanhoe Co. has a capital structure, based on current market values, that consists of 25 percent debt, 15 percent preferred stock, and 60 percent common stock. If the returns required by investors are 8 percent, 12 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Ivanhoe's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.) After tax WACC
Crane Co. has a capital structure, based on current market values, that consists of 28 percent debt, 20 percent preferred stock, and 52 percent common stock. If the returns required by investors are 10 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Crane's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.) After tax WACC
Cullumber Co. has a capital structure, based on current market values, that consists of 40 percent debt, 19 percent preferred stock, and 41 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Cullumber’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.) After tax WACC_____%
Sunland Co. has a capital structure, based on current market values that consists of 45 percent debt, 19 percent preferred stock, and 36 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Sunland's after tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, c.8. 15.25%.) Alter tax WACC
Cullumber Co. has a capital structure, based on current market values, that consists of 40 percent debt, 10 percent preferred stock, and 50 percent common stock. If the returns required by investors are 11 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Cullumber’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.)
Capital Co. has a capital structure, based on current market values, that consists of 31 percent debt, 20 percent preferred stock, and 49 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places,...
4. Capital Co. has a capital structure, based on current market values, that consists of 33 percent debt, 10 percent preferred stock, and 57 percent common stock. If the returns required by investors are 9 percent, 10 percent, and 17 percent for the debt, preferred stock, and common stock, respectively, what is Capital’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal...
Company A has a target capital structure of 30 percent common stock, 5 percent preferred stock, and 65 percent debt. Its cost of equity is 18 percent, the cost of preferred stock is 6.5 percent, and the after-tax cost of debt is 8.5 percent. What is the firm's WACC given a tax rate of 39 percent? 12.50 percent 10.50 percent 9.095 percent 10.431 percent 11.25 percent
2 points QUESTION 12 Floral Perfume Co. has a target capital structure of 40 percent common stock, 5 percent preferred stock, and 55 percent debt. Its cost of common stock is 18 percent the cost of preferred stock is 6 percent, and the pretax cost of debt is 9 percent. What is the firm's WACC given a tax rate of 40 percent? 10.55 percent 10.47 percent 13.38 percent 15.17 percent 9.87 percent
Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its costs of equity is 15 percent, and the cost of debt is 8 Percent. The relevant tax rate is 35 percent. What is Mullineaux's WACC? Common stock weight = 70% Debt weight = 30% Cost of Equity = 15% Cost of Debt = 8% Tax Rate = 35% WACC= ?