Company y has a cost of common equity of 14%. They use 66.67% common equity and 33.33% debt. They have a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. Calculate their WACC.
The ratio of debt and common equity are given and shall be taken as such as the debt sells at par.
Cost of after tax debt= Pretax rate*(1-tax rate)
=10%*(1-40%)=6%
Cost of equity =14%
WACC=(Weight of debt*Cost of debt)+(Weight of equity*Cost of equity)
=(33.33%*6%)+(66.67%*14%)
=11.33%
Hence WACC =11.33%
Company y has a cost of common equity of 14%. They use 66.67% common equity and...
Company y has a cost of common equity of 14%. They use 66.67% common equity and 33.33% debt. They have a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. Calculate their WACC
Company y has a cost of common equity of 14%. It also has a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. What is their WACC if they use 66.67% stock and 33.33% debt?
Company y has a cost of common equity of 10%. It also has a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. What is their WACC if they use 66% stock and 34% debt?
The Paulson Company's year-end balance sheet is shown below. Its
cost of common equity is 14%, its before-tax cost of debt is 11%,
and its marginal tax rate is 40%. Assume that the firm's long-term
debt sells at par value. The firm’s total debt, which is the sum of
the company’s short-term debt and long-term debt, equals $1,120.
The firm has 576 shares of common stock outstanding that sell for
$4.00 per share. The data has been collected in the...
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 8%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm’s total debt, which is the sum of the company’s short-term debt and long-term debt, equals $1,162. The firm has 576 shares of common stock outstanding that sell for $4.00 per share Calculate Paulson's WACC using market-value weights. Do...
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The Pawlson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 12%, and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firm’s total debt, which is the sum of the company’s short-term debt and long-term debt, equals $1,161. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120...
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The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 10%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,136. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Liabilities And Equity Assets Accounts payable and...
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 8%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,185. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. 240 Assets Liabilities And Equity Cash $...