A firm has a WACC of 14%, an expected return on equity of 19%, and a...
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A firm has a WACC of 14%, an expected return on equity of 19%,
and a...
A firm currently has a debt-equity ratio of 0.9. The debt, which is virtually riskless, pays...
A firm currently has a debt-equity ratio of 0.9. The debt, which is virtually riskless, pays an interest rate of 3 %. The expected rate of return on the equity is 12 %. What is the Weighted-Average Cost of Capital if the firm pays no taxes? wacc = 7.74 What would happen to the expected rate of return on equity if the firm changed its debt-equity ratio to 0.1? Assume the firm pays no taxes, the cost of debt does...
answer second part of question below A firm currently has a debt-equity ratio of 0.4. The...
answer second part of question below
A firm currently has a debt-equity ratio of 0.4. The debt, which is virtually riskless, pays an interest rate of 5%. The expected rate of return on the equity is 10 %. What is the Weighted Average Cost of Capital if the firm pays no taxes? Enter your answer as a percentage rounded to two decimal places. Do not include the percentage sign in your answer. WACC = 8.57 Correct response: 8.57+0.02 What would...
3)Suppose a cashless firm A has equity beta of 2, asset beta of 1, then its...
3)Suppose a cashless firm A has equity beta of 2, asset beta of 1, then its debt to equity ratio is ____ . 4)Suppose the asset beta of a firm is 1, ND/E ratio is 1, risk free rate is 1%, market risk premium is 5%. Calculate the expected return of your firm for new investors. Enter the return of your firm for new investors _____% 5)Firm A is not listed, and you use comparable method to calculate its beta....
Ivan Industries (II) has a debt-to-equity ratio of 1.4, a corporate tax rate of 30%, pays...
Ivan Industries (II) has a debt-to-equity ratio of 1.4, a corporate tax rate of 30%, pays 4% interest on its debt and has a required rate of return on equity of 12%. What is II’s WACC? How much does the debt tax shield reduce II’s WACC? What is the required rate of return on firm assets?
Arbitra Inc.'s current capital structure is 30% debt and 70% equity. The expected return on its...
Arbitra Inc.'s current capital structure is 30% debt and 70% equity. The expected return on its debt is 5%, its equity Beta is 1.1. The riskfree rate is 2%, and the expected return on the market is 10%. Consider now the following additional information. The government of Bigland, where Arbitra Inc. is located, introduces a 40% corporate income tax rate. Arbitra Inc. (capital structure still 50% debt and 50% equity) has only one project which is expected to generate $1000...
The Donald Grump Corporation, a publicly traded REIT, has expected total return to equity of 13%,...
The Donald Grump Corporation, a publicly traded REIT, has expected total return to equity of 13%, average interest rate on its debt of 7.5%, and a debt/total asset value ratio of 40%. What is Grump’s equity average cost of capital? 12 points. What is Grump’s firm-level overall average cost of capital? 12 points.
Jackson is an all-equity financed firm; its common stock has an expected return of 12%. Jackson...
Jackson is an all-equity financed firm; its common stock has an expected return of 12%. Jackson plans to issue debt, and use the proceeds to repurchase outstanding shares of common stock. If Jackson issues debt such that its debt-equity ratio becomes .60, the new expected return on equity will be 18%. What will be the market yield of the company's debt? Assume perfect markets.
I will rate! WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure...
I will rate!
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $11 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 14%, a before-tax cost of debt of 12%, and a tax rate of 40%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $2, and the current stock...
A firm has a debt-to-equity ratio of 1.4, a profit margin of 15%, $600,000 in debt...
A firm has a debt-to-equity ratio of 1.4, a profit margin of 15%, $600,000 in debt with an interest rate of 10%, EBIT of $220,000, and a tax rate of 30%. a. What is the firm’s total asset turnover? b. What is the firm’s times interest earned? c. What is the firm’s return on equity?
what is the WACC? 1. A firm has a target debt-to-equity ratio of 1. Its cost...
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.
answer second part of question below
A firm currently has a debt-equity ratio of 0.4. The debt, which is virtually riskless, pays an interest rate of 5%. The expected rate of return on the equity is 10 %. What is the Weighted Average Cost of Capital if the firm pays no taxes? Enter your answer as a percentage rounded to two decimal places. Do not include the percentage sign in your answer. WACC = 8.57 Correct response: 8.57+0.02 What would...
Arbitra Inc.'s current capital structure is 30% debt and 70% equity. The expected return on its debt is 5%, its equity Beta is 1.1. The riskfree rate is 2%, and the expected return on the market is 10%. Consider now the following additional information. The government of Bigland, where Arbitra Inc. is located, introduces a 40% corporate income tax rate. Arbitra Inc. (capital structure still 50% debt and 50% equity) has only one project which is expected to generate $1000...
Jackson is an all-equity financed firm; its common stock has an expected return of 12%. Jackson plans to issue debt, and use the proceeds to repurchase outstanding shares of common stock. If Jackson issues debt such that its debt-equity ratio becomes .60, the new expected return on equity will be 18%. What will be the market yield of the company's debt? Assume perfect markets.
I will rate!
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $11 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 14%, a before-tax cost of debt of 12%, and a tax rate of 40%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $2, and the current stock...
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.
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