Given Debt/equity = 25%
So Debt/(Debt +Equity) = 0.25/(1+0.25) = 20%
&
Equity/(Debt + Equity) = 100% - 20% = 80%
Cost of equity Ke = 15%
Cost of Debt Kd = 10%
So, WACC = Wd*Kd + We*Kd = 0.2*10 + 0.8*15 = 14%
Exercise 18.5.2 What is the WACC for the following firm? Debt/equity = 25%; cost of equity...
what is the WACC?
1. A firm has a target debt-to-equity ratio of 1. Its cost of equity equals 12 percent, the cost of debt is 8 percent, and the tax rate is 30 percent. What is the weighted average cost of capital (WACC)? a) 10.0 percent. b) 10.8 percent. c) 9.8 percent. d) 8.8 percent.
If the WACC for your firm is 7.45% and the target capital structure is 25% debt, 5% preferred stock, and 70% common equity, what would the cost of raising an additional $1 be for your firm? Select one: a. $7.45 b. $25 c. 70% d. $3.60
A firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The firm's cost of equity is 14.5 percent and its pre-tax cost of debt is 8.5 percent. The tax rate is 34 percent. What does the debt-equity ratio need to be for the firm to achieve its target WACC? Stiect one: 0 a. 0.51 O b. 0.57 O C. 0.62 d. 0.70 e. 0.86
23) What proportion of a firm is equity financed if the WACC is 12%, the before-tax cost of debt is 9%, the tax rate is 35%, and the required return on equity is 15%? (2 points) Show all calculations and results with 1 or 2 decimals.
What is the WACC for a firm with 40% debt, 20% preferred stock, and 40% equity if their respective costs are 6% after-tax, 12%, and 18%? The firm's tax rate is 21%.
WACC Kose, Inc., has a target debt-equity ratio of .38. Its WACC is 10.1 percent and the tax rate is 25 percent. a. If the company’s cost of equity is 12 percent, what is its pretax cost of debt? b. If instead you know that the after tax cost of debt is 6.4 percent, what is the cost of equity?
What is the WACC for a firm with 50% debt and 50% equity that pays 12% on its debt, 20% on its equity, and has a 21% tax rate? Multiple Choice 9.6% 12.0% 14.7% 16.0%
Given the following information, what is the WACC of the firm? All values are in millions. Market value of debt: $450 Market value of equity: $1,874 Cost of debt: 5.79% Cost of equity: 8.14% Tax rate: 27% O 7.38% 7.69% 7.77% 07.01%
11-17, WACC. please show formula using Excel
11-15 WACC Suppose lidl Tup 35 percent debt, and that its before-tax cost of UED 10 equity is 13 percent. If the appropriate weighted average tax rate is 34 percent will be TapDance's WACC? (LG11-2) 11-16 WACC Suppose that JB Cos, has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 11 percent while its cost of equity is 15 percent. If the appropriate...
7. Calculate a firm's approximate WACC given that the debt-to-equity ratio is 3, the cost of debt is 8%, the cost of equity is 15%, and the firm's marginal tax rate is 30%: WACC ............