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Question 3 WACC)orelkely be y. ABC Co. has a capital structure which is based on 30%...
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's...
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's outstanding debt has a market value of $1.5 billion and a pre-tax cost of debt of 10%. In addition, its common stocks are valued at $4.5 billion by the market and the current stock price is $10. The company expects to pay $1.08 dividends per share in the next period and dividends are assumed to grow at a constant rate of 5 indefinitely. Assuming...
2a. Capital Autos Corp. has a target capital structure of 60% common stock, 5% preferred stock...
2a. Capital Autos Corp. has a target capital structure of 60% common stock, 5% preferred stock and 35% debt. Its cost of equity is 9%, the cost of preferred stock is 6% and the cost of debt is 5%. The marginal tax rate for the firm is 35%. Calculate the weighted average cost of capital (WACC). 15 pt. 2b. If the variance ABC's stock is 0.49% while its expected return is 18%. What is its coefficient of variation? (5 pt.)
Sunland Co. has a capital structure, based on current market values that consists of 45 percent...
Sunland Co. has a capital structure, based on current market values that consists of 45 percent debt, 19 percent preferred stock, and 36 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Sunland's after tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, c.8. 15.25%.) Alter tax WACC
Pharoah Co. has a capital structure, based on current market values, that consists of 30 percent...
Pharoah Co. has a capital structure, based on current market
values, that consists of 30 percent debt, 5 percent preferred
stock, and 65 percent common stock. If the returns required by
investors are 12 percent, 13 percent, and 15 percent for the debt,
preferred stock, and common stock, respectively, what is Pharoah’s
after-tax WACC? Assume that the firm’s marginal tax rate is 40
percent.
I solved it wrong by doing 30%*12*(1-40%)+13%*12%*+65%*15%=
0.021600 + 0.015600 + 0.097500=
0.1347=13.47%
I am not...
Ivanhoe Co. has a capital structure, based on current market values, that consists of 25 percent...
Ivanhoe Co. has a capital structure, based on current market values, that consists of 25 percent debt, 15 percent preferred stock, and 60 percent common stock. If the returns required by investors are 8 percent, 12 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Ivanhoe's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.) After tax WACC
Capital Co. has a capital structure, based on current market values, that consists of 31 percent...
Capital Co. has a capital structure, based on current market values, that consists of 31 percent debt, 20 percent preferred stock, and 49 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places,...
Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 58% debt,...
Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If its current tax rate is 40%, how much higher will Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained...
Problem 16-11 WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure....
Problem 16-11 WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Debt- Market Equity- Market Debt- to-Value to-Value to-Equity Ratio (wa) Ratio (w) Ratio (D/S)...
ABC Corp has a target capital structure of 30% Debt, 20% Preferred Equity and 50% Common Stock. (1) ABC Corp had a 4.5%...
ABC Corp has a target capital structure of 30% Debt, 20% Preferred Equity and 50% Common Stock. (1) ABC Corp had a 4.5% after tax cost of debt. (2) ABC Corp has a 5% Cost of preferred equity (3) ABC Corp has a 8% cost of Common equity. Calculate ABC Corps WACC.?
ABC Inc.'s capital structure includes only common equity and debt (i.e. no preferred equity). The company's outstanding debt has a market value of $1.5 billion and a pre-tax cost of debt of 10%. In addition, its common stocks are valued at $4.5 billion by the market and the current stock price is $10. The company expects to pay $1.08 dividends per share in the next period and dividends are assumed to grow at a constant rate of 5 indefinitely. Assuming...
2a. Capital Autos Corp. has a target capital structure of 60% common stock, 5% preferred stock and 35% debt. Its cost of equity is 9%, the cost of preferred stock is 6% and the cost of debt is 5%. The marginal tax rate for the firm is 35%. Calculate the weighted average cost of capital (WACC). 15 pt. 2b. If the variance ABC's stock is 0.49% while its expected return is 18%. What is its coefficient of variation? (5 pt.)
Sunland Co. has a capital structure, based on current market values that consists of 45 percent debt, 19 percent preferred stock, and 36 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Sunland's after tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, c.8. 15.25%.) Alter tax WACC
Pharoah Co. has a capital structure, based on current market
values, that consists of 30 percent debt, 5 percent preferred
stock, and 65 percent common stock. If the returns required by
investors are 12 percent, 13 percent, and 15 percent for the debt,
preferred stock, and common stock, respectively, what is Pharoah’s
after-tax WACC? Assume that the firm’s marginal tax rate is 40
percent.
I solved it wrong by doing 30%*12*(1-40%)+13%*12%*+65%*15%=
0.021600 + 0.015600 + 0.097500=
0.1347=13.47%
I am not...
Ivanhoe Co. has a capital structure, based on current market values, that consists of 25 percent debt, 15 percent preferred stock, and 60 percent common stock. If the returns required by investors are 8 percent, 12 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Ivanhoe's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round final answer to 2 decimal places, e.g. 15.25%.) After tax WACC
Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If its current tax rate is 40%, how much higher will Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained...
Problem 16-11 WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Debt- Market Equity- Market Debt- to-Value to-Value to-Equity Ratio (wa) Ratio (w) Ratio (D/S)...
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