Homework Answers
WACC = weight of debt * after tax cost of debt + weight of equity * cost of equity + weight of preferred stock * cost of preferred stock
= 0.25 * 6% * (1-0.35) + 0.67 * 6.81% + 0.08 * 4.44%
= 5.90%
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20 pts Question 4 LO3 Target % Component Component Weighted in Capital Cost (pre-...
Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00%...
Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00% Preferred Stock 8.00% Equity 67.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info (Annual Coupons) Preferred Divided 2 Current Dividend $3.00 Time to Maturity (years) 10 Current Market Price 45 Current Price $81.00 Coupon Rate APR 6.00% Preferred Yield 4.44% Expected Growth in Dividends 3.00% Face Value $1,000.00 Expected Return on Equity 6.81% Current Market Price $1,000.00 YTM...
please answer Question 3 20 pts LO3 Target% Component ComponentWeighted in Capital Cost (pre- Cost Component...
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Question 3 20 pts LO3 Target% Component ComponentWeighted in Capital Cost (pre- Cost Component Structure tax) (after-tax) Cost 30.00% Debt Preferred Stock 2.00% Equity 68.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info Current Dividend $2.00 (Annual Coupons) Time to Maturity (years) Preferred Divided Current Market Price 10 48 Current Price $81.00 Coupon 6.00% Preferred Yield 4.17% Rate APR Expected Growth in 3.00% Dividends Expected Return on 15.54% Equity Face Value $1,000.00...
Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00%...
Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00% Preferred Stock 2.00% Equity 63.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info (Annual Coupons) Preferred Divided 3 Current Dividend $2.00 Time to Maturity (years) 10 Current Market Price 50 Current Price $81.00 Coupon Rate APR 6.00% Preferred Yield 6.00% Expected Growth in Dividends 3.00% Face Value $1,000.00 Expected Return on Equity 5.54% Current Market Price $975.00 YTM...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is Po - $35.00. The last dividend was Do - $3.75, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...
Problem 10-8 Cost of Common Equity and WACC Palencia Paints Corporation has a target capital structure...
Problem 10-8 Cost of Common Equity and WACC Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 11% and its marginal tax rate is 40%. The current stock price is Po = $20.00. The last dividend was Do = $3.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers...
Answer fully Thank you! Please first estimate the cost of each component of capital. Then, figure out the current c...
Answer fully Thank you!
Please first estimate the cost of each component of capital. Then, figure out the current capital structure according to the market value of debt and of equity. Finally, calculate the WACC. Cost of Debt, ra: Allied has outstanding 20-year noncallable bonds with a face value of $1,000, an 8% annual coupon (annual payment), and a market price of $908.71. If Allied is planning to issue new debt, what would be a reasonable estimate of the interest...
7. Solving for the WACC The weighted average cost of capital (WACC) is used as the...
7. Solving for the WACC The weighted average cost of capital (WACC) is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discount rate only for a project of average risk. Consider the case of Turnbull Company, Turnbull Company has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 11.10%, and its cost...
6. Problem 10.08 (Cost of Common Equity and WACC) eBook Palencia Paints Corporation has a target...
6. Problem 10.08 (Cost of Common Equity and WACC) eBook Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its before-tax cost of debt is 10%, and its marginal tax rate is 40%. The current stock price is Po = $35.00. The last dividend was Do = $2.25, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do...
Please first estimate the cost of each component of capital. Then, figure out the current capital...
Please first estimate the cost of each component of capital. Then, figure out the current capital structure according to the market value of debt and of equity. Finally, calculate the WACC. Cost of Debt, ra: Allied has outstanding 20-year noncallable bonds with a face value of $1,000, an 8% annual coupon (annual payment), and a market price of $908.71. If Allied is planning to issue new debt, what would be a reasonable estimate of the interest rate on the new...
eBook Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity,...
eBook Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 25%. The current stock price is Po = $28.00. The last dividend was Do = $3.00, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two...
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Question 3 20 pts LO3 Target% Component ComponentWeighted in Capital Cost (pre- Cost Component Structure tax) (after-tax) Cost 30.00% Debt Preferred Stock 2.00% Equity 68.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info Current Dividend $2.00 (Annual Coupons) Time to Maturity (years) Preferred Divided Current Market Price 10 48 Current Price $81.00 Coupon 6.00% Preferred Yield 4.17% Rate APR Expected Growth in 3.00% Dividends Expected Return on 15.54% Equity Face Value $1,000.00...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is Po - $35.00. The last dividend was Do - $3.75, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...
Problem 10-8 Cost of Common Equity and WACC Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 11% and its marginal tax rate is 40%. The current stock price is Po = $20.00. The last dividend was Do = $3.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers...
Answer fully Thank you!
Please first estimate the cost of each component of capital. Then, figure out the current capital structure according to the market value of debt and of equity. Finally, calculate the WACC. Cost of Debt, ra: Allied has outstanding 20-year noncallable bonds with a face value of $1,000, an 8% annual coupon (annual payment), and a market price of $908.71. If Allied is planning to issue new debt, what would be a reasonable estimate of the interest...
7. Solving for the WACC The weighted average cost of capital (WACC) is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discount rate only for a project of average risk. Consider the case of Turnbull Company, Turnbull Company has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 11.10%, and its cost...
6. Problem 10.08 (Cost of Common Equity and WACC) eBook Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its before-tax cost of debt is 10%, and its marginal tax rate is 40%. The current stock price is Po = $35.00. The last dividend was Do = $2.25, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do...
Please first estimate the cost of each component of capital. Then, figure out the current capital structure according to the market value of debt and of equity. Finally, calculate the WACC. Cost of Debt, ra: Allied has outstanding 20-year noncallable bonds with a face value of $1,000, an 8% annual coupon (annual payment), and a market price of $908.71. If Allied is planning to issue new debt, what would be a reasonable estimate of the interest rate on the new...
eBook Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 25%. The current stock price is Po = $28.00. The last dividend was Do = $3.00, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two...
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