the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

Question

Question

the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

college finance Multiple-Choice

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

1) the CAPM

2) the gordon growth model

3) the average return on the firms equity over the last 5 years.

answer: all of the above

answered by: Andrew San Andres

Add a comment

Answer 2

Similar Homework Help Questions

the WACC is computed as weighted average of the cost of equity and cost of debt. which of the statements is correct? the cost of debt is:

the WACC is computed as weighted average of the cost of equity and cost of debt. which of the statements is correct? the cost of debt is:
the WACC is computed as the weighted average of the cost of equity and the cost of debt. the firm does not have any recently issued bonds. which of these statements is correct?

the WACC is computed as the weighted average of the cost of equity and the cost of debt. the firm does not have any recently issued bonds. which of these statements is correct?
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

1. The weighted average cost of capital (WACC) is calculated as the weighted average of cost of component capital, i...

1. The weighted average cost of capital (WACC) is calculated as the weighted average of cost of component capital, including debt, preferred stock and common equity. In general, debt is less expensive than equity because it is less risky to the investors. Some managers may intend to increase the usage of debt, therefore increase the weight on debt (Wd). Do you think by increasing the weight on debt (Wj) will reduce the WACC infinitely? What are the benefits and costs...
The WACC computation requires you to use the weighted average of the after tax cost of debt and the cost of equity, using appropriate proportions for debt and equity. your frims balance sheet shows $30M of debt and $70 of equity. the market value of your

The WACC computation requires you to use the weighted average of the after tax cost of debt and the cost of equity, using appropriate proportions for debt and equity. your frims balance sheet shows $30M of debt and $70 of equity. the market value of your firms equity is $120M. the new project is different from the existing projects that the firm has invested in, other firms that have investments similar to the new project tend to use a mix...
The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, w...

The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure. Is is the symbol that represents the required rate of return on common stock in the weighted average cost of capital (WACC) equation. Ts Co. has $2.3 million of debt, $1 million of preferred stock, and $2.2 million of common equity. What would be...

The WACC is a weighted average of the costs of debt, preferred stock, and common equity....

The WACC is a weighted average of the costs of debt, preferred stock, and common equity. Would the WACC be different if the equity for the coming year came solely in the form of retained earnings versus equity from the sale of new common stock? Would the calculated WACC depend in any way on the size of the capital budget? How might dividend policy affect the WACC?
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
Dickson, Inc., has a debt-equity ratio of 2.6. The firm's weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.6. The firm's weighted average cost of capital is 9 percent and its pretax cost of debt is 7 percent. The tax rate is 24 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer...

Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is 11 percent and its pretax cost of debt is 8 percent. The tax rate is 23 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer...

the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

Homework Answers

Add Answer to:
the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

Post as a guest

Earn Coins

the WACC is computed as weighted average of the cost of equity and cost of debt. which of the statements is correct? the cost of debt is:

the WACC is computed as the weighted average of the cost of equity and the cost of debt. the firm does not have any recently issued bonds. which of these statements is correct?

Compute the weighted average cost of capital (WACC) if the pre-tax cost of debt is 5%,...

1. The weighted average cost of capital (WACC) is calculated as the weighted average of cost of component capital, i...

The WACC computation requires you to use the weighted average of the after tax cost of debt and the cost of equity, using appropriate proportions for debt and equity. your frims balance sheet shows $30M of debt and $70 of equity. the market value of your

The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, w...

The WACC is a weighted average of the costs of debt, preferred stock, and common equity....

Asap Help! 10 1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 4....

Dickson, Inc., has a debt-equity ratio of 2.6. The firm's weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is...

the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

Homework Answers

Add Answer to: the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?

Post as a guest

Earn Coins

Add Answer to:
the WACC is computed as weighted average of the cost of equity and the cost of debt. what would you use to compute the cost of equity?