Homework Answers
An increase in the risk free rate of return
Because increase in risk free rate of return increase the Cost of Equity hence WACC will increase
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Which one of the following will increase the WACC of a firm? Select one: a. An...
Just Answers Need ASAP Question 46 Which one of the following represents the rate of return...
Just Answers Need ASAP Question 46 Which one of the following represents the rate of return a firm must earn on its assets if it is to maintain the current value of its securities? Select one: a. Cost of equity b. Internal rate of return c. Aftertax cost of debt d. Weighted average cost of capital e. Debt-equity ratio Question 47 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text Great Lakes Packing has two bond issues...
Which is true for a firm's overall cost of equity: Select one: a. It is generally...
Which is true for a firm's overall cost of equity: Select one: a. It is generally less than the firm's after-tax cost of debt b. It is generally less than a leveraged firm's WACC c. It is dependent on growth rate and risk level of the firm d. li is unaffected by changes in the market risk premium Which one of the following is the primary determinant of a firm's cost of capital? Select one: a. Use of Funds b....
Weighted Average Cost of Capital (WACC) Apple Inc. has 5,366,166,000 shares traded at a market value...
Weighted Average Cost of Capital (WACC) Apple Inc. has 5,366,166,000 shares traded at a market value of $126 per share; its debt outstanding has an estimated market value of $90,883,140,000. The stock has a beta of 1.193. The expected return on stocks is 8.78%. The firm is rated AAA and paid 30% of its income as taxes. The risk-free rate is 2.47%, and the yield-to-maturity of Apple’s bonds is 3.27%. A. What is Apple’s debt ratio? B. What is Apple’s...
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at...
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at a market value of $126 per share, its debt outstanding has an estimated market value of $90,883,140,000. The stock has a beta of 1.193. The expected retum on stocks is 8.78%. The firm is rated AAA and paid 30% of its income as taxes. The risk-free rate is 2.47%, and the yield-to-maturity of Apple's bonds is 3 2796. A. What is Apple's debt ratio?...
Your task is to determine the WACC for a given firm using what you know about...
Your task is to determine the WACC for a given firm using what you know about WACC as well as data you can find through research. Your deliverable is a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide relevant information as to the sources of your data. Select a publicly traded company that has debt or bonds and common stock to calculate the current WACC. One good source...
Which of the following statements is correct? An increase in the risk-free rate will increase the...
Which of the following statements is correct? An increase in the risk-free rate will increase the cost of debt. The WACC differs among a company's divisions depending on their riskiness. O All of the answers are correct OUsing internal capital is cheaper than using external capital due to flotation costs O A reasonable measure for the before tax cost of debt is the yield to maturity (adjusted for flotation cost) on outstanding debt.
Calculate the WACC for the firm based on this information: Outstanding shares = 5000 , Share...
Calculate the WACC for the firm based on this information: Outstanding shares = 5000 , Share price = $54 , Total debt = 30,000 , Risk-free rate = 2% , Return on the market = 7% , Yield to Maturity = 5.4% , Tax rate = 0.25 , Beta = 0.55
**THERE ARE 2 PARTS TO THIS QUESTION, PLEASE ANSWER BOTH** 1. What is the WACC for...
**THERE ARE 2 PARTS TO THIS QUESTION, PLEASE ANSWER BOTH**
1. What is
the WACC for the firm?
A
11.74%
B
12.55%
C
12.82%
D
13.35%
E
None of the above are
within .25% of the correct answer.
Marley's Pipe Shops has found that its common equity capital shares have a beta equal to 1.5 while the risk-free return is 8 percent and the expected return on the market is 14 percent. The firm is financed with $120,000,000 of common...
As a firm takes on more debt, its probability of bankruptcy ____________ (options: increase or decrease)....
As a firm takes on more debt, its probability of bankruptcy ____________ (options: increase or decrease). Other factors held constant, a firm whose earnings are relatively volatile faces a __________ (options: greater or lower) chance of bankruptcy. Therefore, when other factors are held constant, a firm whose earnings are relatively volatile should use ________ (options: more or less) debt than a more stable firm. When bankruptcy costs become more important, they ________ the tax benefits of debt. General Forge and...
Which one of these will increase a company's aftertax cost of debt? Multiple Choice A decrease...
Which one of these will increase a company's aftertax cost of debt? Multiple Choice A decrease in the company's debt-equity ratio o A decrease in the company's tax rate o An increase in the credit rating of the company's bonds o An increase in the company's beta o o c ) A decrease in the market rate of interest
Which is true for a firm's overall cost of equity: Select one: a. It is generally less than the firm's after-tax cost of debt b. It is generally less than a leveraged firm's WACC c. It is dependent on growth rate and risk level of the firm d. li is unaffected by changes in the market risk premium Which one of the following is the primary determinant of a firm's cost of capital? Select one: a. Use of Funds b....
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at a market value of $126 per share, its debt outstanding has an estimated market value of $90,883,140,000. The stock has a beta of 1.193. The expected retum on stocks is 8.78%. The firm is rated AAA and paid 30% of its income as taxes. The risk-free rate is 2.47%, and the yield-to-maturity of Apple's bonds is 3 2796. A. What is Apple's debt ratio?...
Which of the following statements is correct? An increase in the risk-free rate will increase the cost of debt. The WACC differs among a company's divisions depending on their riskiness. O All of the answers are correct OUsing internal capital is cheaper than using external capital due to flotation costs O A reasonable measure for the before tax cost of debt is the yield to maturity (adjusted for flotation cost) on outstanding debt.
**THERE ARE 2 PARTS TO THIS QUESTION, PLEASE ANSWER BOTH**
1. What is
the WACC for the firm?
A
11.74%
B
12.55%
C
12.82%
D
13.35%
E
None of the above are
within .25% of the correct answer.
Marley's Pipe Shops has found that its common equity capital shares have a beta equal to 1.5 while the risk-free return is 8 percent and the expected return on the market is 14 percent. The firm is financed with $120,000,000 of common...
Which one of these will increase a company's aftertax cost of debt? Multiple Choice A decrease in the company's debt-equity ratio o A decrease in the company's tax rate o An increase in the credit rating of the company's bonds o An increase in the company's beta o o c ) A decrease in the market rate of interest
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