Cinco De Mayo has a target debt-equity ratio of 0.56. (Hint: if you're not sure what to do about "debt-equity ratio", watch my YouTube video on that topic!) The yield to maturity on its bonds is 11 percent. Its cost of equity is 20 percent. The corporate income tax rate is 32 percent. Calculate the WACC for this company. |
Multiple Choice
11.97%
12.99%
15.51%
16.28%
14.73%
WACC = weight of debt * after tax cost of debt + weight of equity * cost of equity
debt/equity = 0.56
and debt + equity = 1
=>
equity = 25/39
debt = 14/39
WACC = 14/39 * 11% * (1-0.32) + 25/39 * 20%
= 15.51%
Cinco De Mayo has a target debt-equity ratio of 0.56. (Hint: if you're not sure what...
Cinco De Mayo has a target debt-equity ratio of 0.56. (Hint: If you're not sure what to do about "debt-equity ratio", watch my YouTube video on that topic!) The yield to maturity on its bonds is 11 percent. Its cost of equity is 19 percent. The corporate income tax rate is 32 percent. Calculate the WACC for this company. Multiple Choice Ο 14.12% Ο 12.55% Ο 15.61% Ο Ο
Cinco De Mayo has a target debt-equity ratio of 0.63. (Hint: if you're not sure what to do about "debt-equity ratio", watch my YouTube video on that topic!) The yield to maturity on its bonds is 11 percent. Its cost of equity is 19 percent. The corporate income tax rate is 35 percent. Calculate the WACC for this company.
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Cinco De Mayo has a target debt-equity ratio of 0.69. (Hint: if you're not sure what to do about "debt-equity ratio", watch my YouTube video on that topic!) The yield to maturity on its bonds is 11 percent. Its cost of equity is 17 percent. The corporate income tax rate is 34 percent. Calculate the WACC for this company. rev: 09_20_2012 Multiple Choice 11.24% 10.28% 12.37% 13.02% 13.67% This is the last question in the assignment. To submit, use Alt...
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