Homework Answers
| Debt Category | ||||
| Long term Debt | Debt Amount | Weight | Interest% | Weighted Cost |
| 1990 Bond | 25,000,000 | 0.34 | 8.25 | 2.77 |
| 1998 Bond | 15,000,000 | 0.20 | 7.90 | 1.59 |
| 2007 Bond | 17,000,000 | 0.23 | 9.00 | 2.05 |
| 2011 Bond | 17,550,000 | 0.24 | 9.00 | 2.12 |
| 74,550,000 | WACD | 8.53 | ||
| Equity | ||||
| Preferred Stock | 11,000,000 | 0.11 | 9.00 | 0.98 |
| Common Stock | 25,000,000 | 0.25 | 6.00 | 1.49 |
| Retained Earnings | 65,000,000 | 0.64 | 10.50 | 6.76 |
| 101,000,000 | WACE | 9.22 | ||
| Debt | 74,550,000 | 0.42 | 8.53 | 3.62 |
| Equity | 101,000,000 | 0.58 | 9.22 | 5.31 |
| Total Debt and Equity | 175,550,000 | WACC | 8.93 |
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HELP WACC CALCULATIONS
1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 10...
Asap Help! 10 1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 4....
Asap Help!
10 1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 4. Wagtut DEBT Category DEBT Amount Weight Interest % Weighted Cost Long-Term Debt WA Equity 1990 Bond 1998 Bond 2007 Bond 2011Bond $ $ $ $ 25,000,000.00 15,000,000.00 17,000,000.00 17,550,000.00 8.25% 7.90% 9.00% 9.00% WACD Equity Preferred Stock Common Stock Retained Earnings $ $ 9.00% 6.00% 11,000,000.00 25,000,000.00 $ 65,000,000.00 10.50% WACE WACC TotalDebt/Equity $ 175,550,000.00 Hint: Part C PVIF
Compute the weighted average cost of capital (WACC) if the pre-tax cost of debt is 5%,...
Compute the weighted average cost of capital (WACC) if the pre-tax cost of debt is 5%, the cost of equity is 10%, the corporate tax rate is 38%, the market value of the firms debt is $120 million, and the market value of the firms equity is %180 million
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...
15 . Solving for the WACC The weighted average cost of capital (WACC) is used as...
15 . 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 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.10%, and its...
Based upon the following facts calculate the Weighted Average Cost of Capital (WACC) for Student Success...
Based upon the following facts calculate the Weighted Average Cost of Capital (WACC) for Student Success Corporation (SSC): PART 1 WACC Tax rate 40 % Debt Financing: $10,000 Face Value 10-Year, 5 % Coupon, Semiannual Non-Callable Bonds Selling for $11,040 New bonds will be privately placed with no flotation cost. >Common Stock: Current Price $40; Current Dividend $3.00 and Growth Rate 5 %. >Common Stock: Beta 1.1; Risk Free Rate 2.0 %; Required Return of the Market 7% Capital structure:...
8. Solving for a firm's WACC A firm's weighted average cost of capital (WACC) is used...
8. Solving for a firm's WACC A firm's weighted average cost of capital (WACC) is used as the discount rate to evaluate various capital budgeting projects. However, remember the WACC is an appropriate discount rate only for a project of average risk. Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Consider the case of Green Caterpillar Garden Supplies Green Caterpillar Garden Supplies has a target capital...
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at...
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at a market value of $126 per share, its debt outstanding has an estimated market value of $90,883,140,000. The stock has a beta of 1.193. The expected retum on stocks is 8.78%. The firm is rated AAA and paid 30% of its income as taxes. The risk-free rate is 2.47%, and the yield-to-maturity of Apple's bonds is 3 2796. A. What is Apple's debt ratio?...
• You are a business analyst tasked with determining the WACC (weighted average cost of capital)...
• You are a business analyst tasked with determining the WACC (weighted average cost of capital) of Phil's Garlic Ice Cream, Inc. based in Gilroy, CA. You have collected the following data: EN = 0.4 D/V = 0.6 Cost of debt (Rd) = 0.054 Effective tax rate (Te) = 0.11 Rm = 0.13 Rp = 0.016 The company has been public for 2 years and you know the following about their stock (and the general stock market): Year %change in...
10-7: Composite, or Weighted Average, Cost of Capital, WACC WACC Midwest Electric Company (MEC) uses only...
10-7: Composite, or Weighted Average, Cost of Capital, WACC WACC Midwest Electric Company (MEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd-11% as long as it financ at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (Do) was $2.20, its expected constant growth rate is 396, and its common stock sells for $21. MEC's tax rate is 40%. Two projects are available: Project...
I only need help with the answer to Weighted Average Cost of Capital (WACC) using the...
I only need help with the answer to Weighted Average Cost of
Capital (WACC) using the information provided from the previous
questions, thanks.
GHI Company's current share price is $15.6 and it is expected to pay a $1.2 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4% per year. What is an estimate of GHI Company's cost of equity? Enter your answer as a percentage and rounded to 2 DECIMAL...
Asap Help!
10 1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 4. Wagtut DEBT Category DEBT Amount Weight Interest % Weighted Cost Long-Term Debt WA Equity 1990 Bond 1998 Bond 2007 Bond 2011Bond $ $ $ $ 25,000,000.00 15,000,000.00 17,000,000.00 17,550,000.00 8.25% 7.90% 9.00% 9.00% WACD Equity Preferred Stock Common Stock Retained Earnings $ $ 9.00% 6.00% 11,000,000.00 25,000,000.00 $ 65,000,000.00 10.50% WACE WACC TotalDebt/Equity $ 175,550,000.00 Hint: Part C PVIF
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...
Based upon the following facts calculate the Weighted Average Cost of Capital (WACC) for Student Success Corporation (SSC): PART 1 WACC Tax rate 40 % Debt Financing: $10,000 Face Value 10-Year, 5 % Coupon, Semiannual Non-Callable Bonds Selling for $11,040 New bonds will be privately placed with no flotation cost. >Common Stock: Current Price $40; Current Dividend $3.00 and Growth Rate 5 %. >Common Stock: Beta 1.1; Risk Free Rate 2.0 %; Required Return of the Market 7% Capital structure:...
8. Solving for a firm's WACC A firm's weighted average cost of capital (WACC) is used as the discount rate to evaluate various capital budgeting projects. However, remember the WACC is an appropriate discount rate only for a project of average risk. Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Consider the case of Green Caterpillar Garden Supplies Green Caterpillar Garden Supplies has a target capital...
[5] Weighted Average Cost of Capital (WACC) (25 points) Apple Inc. has 5,366,166,000 shares traded at a market value of $126 per share, its debt outstanding has an estimated market value of $90,883,140,000. The stock has a beta of 1.193. The expected retum on stocks is 8.78%. The firm is rated AAA and paid 30% of its income as taxes. The risk-free rate is 2.47%, and the yield-to-maturity of Apple's bonds is 3 2796. A. What is Apple's debt ratio?...
• You are a business analyst tasked with determining the WACC (weighted average cost of capital) of Phil's Garlic Ice Cream, Inc. based in Gilroy, CA. You have collected the following data: EN = 0.4 D/V = 0.6 Cost of debt (Rd) = 0.054 Effective tax rate (Te) = 0.11 Rm = 0.13 Rp = 0.016 The company has been public for 2 years and you know the following about their stock (and the general stock market): Year %change in...
10-7: Composite, or Weighted Average, Cost of Capital, WACC WACC Midwest Electric Company (MEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd-11% as long as it financ at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (Do) was $2.20, its expected constant growth rate is 396, and its common stock sells for $21. MEC's tax rate is 40%. Two projects are available: Project...
I only need help with the answer to Weighted Average Cost of
Capital (WACC) using the information provided from the previous
questions, thanks.
GHI Company's current share price is $15.6 and it is expected to pay a $1.2 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4% per year. What is an estimate of GHI Company's cost of equity? Enter your answer as a percentage and rounded to 2 DECIMAL...
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