Jack's Construction Co. has bonds that are yielding a pre-tax 8.6 percent. The firm's cost of...

Question

Question

Answer 1

Answer #1

WACC = Amwen Calculation of ware ware = (Cost of equity & weight of equity) + ( cost of Debt ofte tarix & weight of Debt). =

Answer 2

Similar Homework Help Questions

Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yleld...

Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yleld 10.2 percent. The company also has 4.7 million shares of common stock outstanding. The stock has a beta of 1.9 and sells for $55 a share. The U.S. Treasury bill is ylelding 6 percent and the market risk premium is 9 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital? 18.51 percent 926 percent O 21.25 percent 14.81...
Jack's Construction Co. has $80 million in outstanding debt. The debt has a yield to maturity...

Jack's Construction Co. has $80 million in outstanding debt. The debt has a yield to maturity of 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jack's tax rate is 35%. What is Jack's weighted average cost of capital? 7.10% 7.39% 11.37% 10.65% 10.38%
The Pumpkin Inc. has a cost of equity of 16.5 percent and a pre-tax cost of...

The Pumpkin Inc. has a cost of equity of 16.5 percent and a pre-tax cost of debt of 9.4 percent. The firm's target weighted average cost of capital is 12 percent and its tax rate is 20 percent. What is the firm's debt-equity ratio? a) 0.89 b) 1.00 c) 1.26 d) 0.77

Meiston Press has a debt-equity ratio of 1.80. The pre-tax cost of debt is 9.00 percent...

Meiston Press has a debt-equity ratio of 1.80. The pre-tax cost of debt is 9.00 percent and the cost of equity is 14.1 percent. What is the firm’s weighted average cost of capital (WACC) if the tax rate is 34 percent? 10.00 percent 8.85 percent 9.63 percent 10.88 percent
Corporate Financial Management:The Cost of Capital 12. a. Eve Industries has a target capital str...

Corporate Financial Management:The Cost of Capital 12. a. Eve Industries has a target capital structure of 41% ordinary equity, 4% preference shares, and 55% debt. Its cost of equity is 19%, the cost of preference shares is 6.5%, and the pre-tax cost of debt is 7.5%. If the firm has a tax rate of 34%, what is the firm’s Weighted Average Cost of Capital (WACC)? (20%) Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar...
The Nickel and Copper Store has a cost of equity of 8.6%, a pretax cost of...

The Nickel and Copper Store has a cost of equity of 8.6%, a pretax cost of debt of 2.7%, and a tax rate of 35%. What is the firm's weighted average cost of capital if the debt-equity ratio is 0.76?

Globex Corp. has a capital structure that consists of 40% debt and 60% equity. The firm's...

Globex Corp. has a capital structure that consists of 40% debt and 60% equity. The firm's current beta is 1.10, but management wants to understand Globex Corp.'s market risk without the effect of leverage. If Globex Corp. has a 40% tax rate, what is its unlevered beta? 0.91 0.75 0.79 0.71 Now consider the case of another company: U.S. Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 6%,...
Assume that your firm's marginal tax rate is 35% and that your firm has the following...

Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure. Your firm does not issue preferred stocks. What is your firm's WACC? Debt Book value of bonds $60 MM Market value of bonds $50 MM Coupon Rate 6.0% Pre-tax cost of debt (e.g., YTM) 7.5% Common Equity Book value of common equity $20 MM Market value of common equity $25 MM Required return (e.g. from the CAPM) 12.6%
A firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The...

A firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The firm's cost of equity is 14.5 percent and its pre-tax cost of debt is 8.5 percent. The tax rate is 34 percent. What does the debt-equity ratio need to be for the firm to achieve its target WACC? Stiect one: 0 a. 0.51 O b. 0.57 O C. 0.62 d. 0.70 e. 0.86

12) Albert's recently paid its annual dividend of $1.98 per share. At that time, the firm...

12) Albert's recently paid its annual dividend of $1.98 per share. At that time, the firm announced that all future dividends will be increased by 2.2 percent annually. What is the firm's cost of equity if the stock is curently selling for $28.40 a share? A) 11.32 percent В) 9.33 реrcent C) 11.08 percent D) 10.06 percent E) 10.47 percent 12) 13) 13) The cost of equity for RJ Corporation is 8.4 percent and the debt-equity ratio is .6. The...