ZuoTi.Pro
Question

Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent...

Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 9.5 percent coupon, paid semiannually, a current maturity of 20 years, and sell for the par value, $1,000. The firm's marginal tax rate is 37 percent.
What is Rollins' component after-tax cost of debt? Express your answer in percentage (without the % sign) and round it to two decimal places.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

2 Face value = 1000 Time = 20x2= 40 periods Coupon = 9.5%.x1000 = 47.50 Paesent value = 1000 Using financial calculator, fv=1

0 0
Add a comment
Know the answer?
Add Answer to:
Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent...

    Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Rollins' beta is 1.7 , the risk-free rate is 4 percent, and the market risk premium is 4 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $28 per share, and has a growth rate of 4 percent. The firm's policy is to use a risk premium of 5 percentage points...

  • Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent...

    Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Rollins' beta is 1.7 , the risk-free rate is 5 percent, and the market risk premium is 6 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $28 per share, and has a growth rate of 6 percent. The firm's policy is to use a risk premium of 4 percentage points...

  • 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...

  • 3- Your company is estimating its WACC. Its target capital structure is 30 percent debt, 10 perce...

    3- Your company is estimating its WACC. Its target capital structure is 30 percent debt, 10 percent preferred stock, and 60 percent common equity. Its bonds have an 8 percent coupon, paid quarterly, a current maturity of 15 years, and sell for $895. The firm could sell, at par, $100 preferred stock which pays $10 annual dividend, but flotation costs of 5 incurred if the company will ssue new preferred stocks. This company's beta is 1.3, the risk-free rate is...

  • WACC problem

    Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm could sell, at par, $100 preferred stock which pays a 12 percentannual dividend, but flotation costs of 5 percent would be incurred. Rollins' beta is 1.2, the risk-free rate is 10 percent, and the market risk premium...

  • Rollins Corporation has a target capital structure consisting of 20% debt, 20% preferred stock, and 60%...

    Rollins Corporation has a target capital structure consisting of 20% debt, 20% preferred stock, and 60% common equity. Assume the firm has insufficient retained earnings to fund the equity portion of its capital budget. It has 20-year, 12% semiannual coupon bonds that sell at their par value of $1,000. The firm could sell, at par, $100 preferred stock that pays a 12% annual dividend, but flotation costs of 5% would be incurred. Rollins’ beta is 1.2, the risk-free rate is...

  • QUESTION 33 Rollins Corporation's bonds have a 12 percent coupon, paid semiannually. It matures in 20...

    QUESTION 33 Rollins Corporation's bonds have a 12 percent coupon, paid semiannually. It matures in 20 years, and its current market price is $1,000. The maturity value is $1,000. The firm's marginal tax rate is 40 percent. Which of the following is Rollins' after-tax cost of debt? A. 6.8 percent B. 7.2 percent C. 5.3 percent D. 9.5 percent E. 8.4 percent

  • Vandelay Industries has a target capital structure consisting of 30% debt, 10% preferred stock, and 60%...

    Vandelay Industries has a target capital structure consisting of 30% debt, 10% preferred stock, and 60% common equity. Vandelay has 20-year, 12% semiannual coupon bonds that sell at their par value of $1,000. The component cost of preferred stock is 12.6%. Vandelay is a constant growth firm with plans to pay a dividend of $2.10, sells for $27.00 per share, and has a growth rate of 8%. Flotation costs on new common stock are 10%, and the firm's marginal tax...

  • 11-17, WACC. please show formula using Excel 11-15 WACC Suppose lidl Tup 35 percent debt, and...

    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...

  • Miller Manufacturing has a target debt-to-equity ratio of 0.60. Its cost of equity is 14 percent,...

    Miller Manufacturing has a target debt-to-equity ratio of 0.60. Its cost of equity is 14 percent, and its cost of debt is 8 percent. If the tax rate is 38 percent, what is Miller's WACC? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) WACC % 6.66 points Raymond Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares of 6% $100 par value preferred stock outstanding, and 159,000 7.50% semiannual bonds outstanding, par...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT