Rexco before-tax cost of debt is 6%, their cost of equity is 10%, their books show...
Rexco before-tax cost of debt is 6%, their cost of equity is 10%, their books show $10 million of debt and $30 of equity. IF their debt trades at par, their 1 million outstanding shares at $70/share, and their tax rate is 20%, what is their weighted average cost of captial?
7.20%
7.50%
8.25%
9.35%
9.50%
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![Particulars Equity capital amount $70.00 [amount /total] market value weights 0.8750 cost of capital 10.00% [weights x cost]](http://img.homeworklib.com/questions/e0d60450-789f-11ea-a31b-572257f98c8a.png?x-oss-process=image/resize,w_560)
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Rexco before-tax cost of debt is 6%, their cost of equity is
10%, their books show...
rexco's before tax cost of debt is 6%, their cost of equity is 10%, their books...
rexco's before tax cost of debt is 6%, their cost of equity is 10%, their books show $10 million of debt and $30 million of equity. if their debt trades at par, their $1 million outstanding shares trade at $70/share, and their tax rate is 20%. what is their weighted average cost of capital
Company y has a cost of common equity of 10%. It also has a before-tax cost...
Company y has a cost of common equity of 10%. It also has a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. What is their WACC if they use 66% stock and 34% debt?
19. A firm has a cost of debt of 6 percent and a cost of equity...
19. A firm has a cost of debt of 6 percent and a cost of equity of 13.7 percent. The debt–equity ratio is 1.02. There are no taxes. What is the firm's weighted average cost of capital? 20. Hotel Cortez is an all-equity firm that has 5,500 shares of stock outstanding at a market price of $15 per share. The firm's management has decided to issue $30,000 worth of debt and use the funds to repurchase shares of the outstanding...
Question 2 5 pts Our firm's capital structure based on market values is 30% debt and...
Question 2 5 pts Our firm's capital structure based on market values is 30% debt and 70% equity. The firm's before tax cost of debt is 5%, its cost of equity is 10%, and its tax rate is 40%. Currently, the target value weight of debt is 40% and the target value weight of equity is 60%. What would be the firm's weighted average cost of capital (WACC) based on this information? 7.20% 8.75% 8.25% 7.90% 8.50%
Company y has a cost of common equity of 14%. It also has a before-tax cost...
Company y has a cost of common equity of 14%. It also has a before-tax cost of debt of 10% and its marginal tax rate is 40%. Assume that the company's long-term debt sells at par value. The company has 500 shares of common stock outstanding that sell for $3.25 per share. What is their WACC if they use 66.67% stock and 33.33% debt?
Suppose the debt ratio (D/TA) is 10%, the current (before-tax) cost of debt is 8%, the...
Suppose the debt ratio (D/TA) is 10%, the current (before-tax) cost of debt is 8%, the current cost of equity is 16%, and the tax rate is 40%. An increase in the debt ratio to 20% would have decreased the weighted average cost of capital (WACC). true or false?
1. Thompson Inc.'s capital structure features 30% debt and 70% common equity. The appropriate tax rate...
1. Thompson Inc.'s capital structure features 30% debt and 70% common equity. The appropriate tax rate is 36%. Thompson's common stock is currently selling for $60 per share. The next dividend is expected to be $2 per share and all future dividends are expected to grow at 6% per year. Thompson has a $40 million (face value) 25-year bond issue selling for 102% of par that has a 6.25% coupon, paid annually. The par value of each bond is $1,000....
Sam's Souvenir Shop has an after-tax cost of debt of 8 %, a cost of equity...
Sam's Souvenir Shop has an after-tax cost of debt of 8 %, a cost of equity of 12 %, and a cost of preferred stock of 9 %. The firm has 116,000 shares of common stock outstanding at a market price of $24 a share. There are 51,000 shares of preferred stock outstanding at a market price of $38 a share. The bond issue has a face value of $900,000 and a market quote of 105. The company's tax rate...
Compute the weighted average cost of capital given: The before tax cost of debt is 10.5%...
Compute the weighted average cost of capital given: The before tax cost of debt is 10.5% The cost of preferred stock is 11.75% The cost of common stock equity is 13% The tax rate is 40% The sources of capital are: Long term debt 40% Preferred stock 15% Common stock equity ????? Use the following format for your answer: 7.50%
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...
Question 2 5 pts Our firm's capital structure based on market values is 30% debt and 70% equity. The firm's before tax cost of debt is 5%, its cost of equity is 10%, and its tax rate is 40%. Currently, the target value weight of debt is 40% and the target value weight of equity is 60%. What would be the firm's weighted average cost of capital (WACC) based on this information? 7.20% 8.75% 8.25% 7.90% 8.50%
1. Thompson Inc.'s capital structure features 30% debt and 70% common equity. The appropriate tax rate is 36%. Thompson's common stock is currently selling for $60 per share. The next dividend is expected to be $2 per share and all future dividends are expected to grow at 6% per year. Thompson has a $40 million (face value) 25-year bond issue selling for 102% of par that has a 6.25% coupon, paid annually. The par value of each bond is $1,000....
Sam's Souvenir Shop has an after-tax cost of debt of 8 %, a cost of equity of 12 %, and a cost of preferred stock of 9 %. The firm has 116,000 shares of common stock outstanding at a market price of $24 a share. There are 51,000 shares of preferred stock outstanding at a market price of $38 a share. The bond issue has a face value of $900,000 and a market quote of 105. The company's tax rate...
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...
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