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Just Answer M12-20 ONLY.
M12-20. Estimating Cost of Debt Capital Assume that a company's financial statements...
Just Need M12-21 the first one Only. M12-21. Estimating Weighted Average Cost of Capital Assume that...
Just Need M12-21 the first one Only.
M12-21. Estimating Weighted Average Cost of Capital Assume that a company has $1.2 billion in debt, its cost of debt is 5%, it has $2 billion in equity, and its cost of equity capital is 7%. Compute the company's WACC. M12-22. Estimating Weighted Average Cost of Capital Assume that a company has $1 billion in preferred stock and $3 billion in common stock. Also, it pays 6% dividends on preferred stock and its...
Estimating Cost of Debt Capital Assume the December 31, 2010, partial financial statements taken from the...
Estimating Cost of Debt Capital Assume the December 31, 2010, partial financial statements taken from the annual report for AT&T (T) follow. Consolidated Statements of Income Dollars in millions 2010 Operating revenues Wireless service $ 53,510 Voice 28,315 Data 27,479 Directory 3,935 Other 11,041 Total operating revenues 124,280 Operating expenses Cost of services and sales 52,263 Selling, general and administrative 33,065 Depreciation and amortization 19,379 Total operating expenses 104,707 Operating income 19,573 Other income (expense) Interest expense (3,394) Equity in...
Sandpiper Inc. is estimating its weighted average cost of capital (WACC). Sandpiper’s capital structure weights on...
Sandpiper Inc. is estimating its weighted average cost of capital (WACC). Sandpiper’s capital structure weights on debt, preferred stock, and equity are 40%, 0%, and 60%, respectively. Its corporate tax rate is 30%. The expected returns required by holders of debt and equity are 6.00% and 10.50%, respectively. Compute Sandpiper’s WACC. 6.55% 7.98% 8.11% 8.25% 9.75% 10.00%
Estimating the Cost of Debt Capital Kellogg Company manufactures cereal and other convenience food under its...
Estimating the Cost of Debt Capital Kellogg Company manufactures cereal and other convenience food under its many well-known brands such as Kellogg’s®, Keebler®, and Cheez-It®. The company, with over $13.5 billion in annual sales worldwide, partially finances its operation through the issuance of debt. At the beginning of its 2015 fiscal year, it had $6.7 billion in total debt. At the end of fiscal year 2015, its total debt had increased to $6.8 billion. Its fiscal 2015 interest expense was...
Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and...
Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 14 percemt while its cost of equity is 18 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB's WACC? (Round your answer to 2 decimal places.) WACC % Suppose that B2B, Inc. has a capital structure of 35...
Corporate Financial Management:The Cost of Capital 12. a. Eve Industries has a target capital str...
Corporate Financial Management:The Cost of Capital 12. a. Eve Industries has a target capital structure of 41% ordinary equity, 4% preference shares, and 55% debt. Its cost of equity is 19%, the cost of preference shares is 6.5%, and the pre-tax cost of debt is 7.5%. If the firm has a tax rate of 34%, what is the firm’s Weighted Average Cost of Capital (WACC)? (20%) Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar...
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's...
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's outstanding debt has a market value of $1.5 billion and a pre-tax cost of debt of 10%. In addition, its common stocks are valued at $4.5 billion by the market and the current stock price is $10. The company expects to pay $1.08 dividends per share in the next period and dividends are assumed to grow at a constant rate of 5 indefinitely. Assuming...
Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is...
Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is 11 percent and its pretax cost of debt is 8 percent. The tax rate is 23 percent. a. What is the company's cost of equity capital? (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 company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer...
Williamson, Inc., has a debt–equity ratio of 2.54. The company's weighted average cost of capital is...
Williamson, Inc., has a debt–equity ratio of 2.54. The company's weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent. The corporate tax rate is 40 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital % b. What is the company’s unlevered cost of equity capital?...
Rollins Corporation is estimating its WACC. It’s current and target capital structure is 20 percent debt,...
Rollins Corporation is estimating its WACC. It’s current and target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon rate, paid semiannually, a current maturity of 20 years, and sell for $1,040. The firm could sell, at par, $100 preferred stock which pays a $12.00 annual preferred dividend. Rollins' common stock beta is 1.2, and the risk-free rate is 10 percent. Rollins is a constant-growth firm which...
Just Need M12-21 the first one Only.
M12-21. Estimating Weighted Average Cost of Capital Assume that a company has $1.2 billion in debt, its cost of debt is 5%, it has $2 billion in equity, and its cost of equity capital is 7%. Compute the company's WACC. M12-22. Estimating Weighted Average Cost of Capital Assume that a company has $1 billion in preferred stock and $3 billion in common stock. Also, it pays 6% dividends on preferred stock and its...
Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 14 percemt while its cost of equity is 18 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB's WACC? (Round your answer to 2 decimal places.) WACC % Suppose that B2B, Inc. has a capital structure of 35...
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's outstanding debt has a market value of $1.5 billion and a pre-tax cost of debt of 10%. In addition, its common stocks are valued at $4.5 billion by the market and the current stock price is $10. The company expects to pay $1.08 dividends per share in the next period and dividends are assumed to grow at a constant rate of 5 indefinitely. Assuming...
Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is 11 percent and its pretax cost of debt is 8 percent. The tax rate is 23 percent. a. What is the company's cost of equity capital? (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 company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer...
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