Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%.
Security | Market Value | Required Rate of Return |
||||
Debt | $ | 20 | million | 2 | % | |
Preferred stock | 30 | million | 4 | |||
Common stock | 50 | million | 8 | |||
What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Total value=(20+30+50)=$100 million
After-tax rate of debt=2*(1-tax rate)
=2*(1-0.21)=1.58%
WACC=Respective return*Respective weight
=(20/100*1.58)+(30/100*4)+(50/100*8)
=5.52%(Approx).
Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%. Security Market...
Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%. Security Market Value Required Rate of Return Debt $ 20 million 4 % Preferred stock 10 million 6 Common stock 50 million 10 What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
3. WACC. Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%. What is its WACC?(QL013-1) Security Market Value Required Rate of Return Debt $20 million Preferred stock 10 million Common stock 50 million 02
ch.13 #1 Reactive Power Generation has the following capital structure. Its corporate tax rate is 30%. Security Market Value Required Rate of Return Debt $ 10 million 4 % Preferred stock 30 million 6 Common stock 40 million 10 What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) its not 2.13 0r 7.425
You are given the following information for Watson Power Co. Assume the company's tax rate is 22 percent. Debt: 7,000 5.6 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 400,000 shares outstanding, selling for $58 per share; the beta is 1.09. Preferred stock: 17,000 shares of 3.4 percent preferred stock outstanding, currently selling for $79 per share. The par value is $100 per share....
Targaryen Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 7 percent, and the pretax cost of debt is 8 percent. The relevant tax rate is 21 percent. a. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) b. What is the...
Targaryen Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 7 percent, and the pretax cost of debt is 8 percent. The relevant tax rate is 21 percent. a. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the...
Baron Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 5 percent The relevant tax rate is 21 percent. a. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the...
Baron Corporation has a target capital structure of 75 percent common stock, 10 percent preferred stock, and 15 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 21 percent. a. What is the company's WACC? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b.What is the aftertax...
Problem 14-9 Calculating WACC (LO3] Targaryen Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 5 percent. The relevant tax rate is 21 percent. a. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,...
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,...