Homework Answers
Answer:
| Plan | Debt | Equity | WACC % | ||||
| Percent | Rate | R * % | Percent | Rate | R * % | Equity + Debt | |
| 1 | 100 | 17.9 | 17.9 | 0 | 0 | 0 | 17.9 |
| 2 | 70 | 13 | 9.1 | 30 | 7.8 | 2.34 | 11.44 |
| 3 | 65 | 10.8 | 7.02 | 35 | 7.8 | 2.73 | 9.75 |
| 4 | 50 | 10.8 | 5.4 | 50 | 7.9 | 3.95 | 9.35 |
| 5 | 35 | 9.1 | 3.185 | 65 | 9.8 | 6.37 | 9.555 |
| 6 | 20 | 7 | 1.4 | 80 | 12.5 | 10 | 11.4 |
| 7 | 0 | 0 | 0 | 100 | 12.5 | 12.5 | 12.5 |
WACC = Debt cost * weight + Equity cost * weight
When we consider 50% debt and 50% equity WACC is lowest i.e. 9.35%
Add Answer to:
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Debt Capital Percentage 100 70 65 50 35 20 Equity Capital Plan Rate, % 15.5 13.5 Percentage Rate% 2 3 4 5 6 30 35 50 65 80 100 7.8 7.8 7.9 9.8 12.5 12.5 10.5 8.5 DE mix...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Rate,% Plan 1 2 3 4 5 6 7 Debt Capital Percentage 100 70 65 50 35 20 Rate, % 17.3 13.4 11.2. 112 9.5 7.4 30 35 50 65 80 100 7.8 7.8 7.9 9.8...
WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common...
WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $3.50 dividend per share (D0 = $3.50). The stock's price is currently $35.00, its dividend is expected to grow at a constant rate of 8% per year, its tax rate is 35%, and its WACC is 12.30%. What percentage of the company's capital structure consists of debt? Round...
WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common...
WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $2.00 dividend per share (D0 = $2.00). The stock's price is currently $28.00, its dividend is expected to grow at a constant rate of 6% per year, its tax rate is 35%, and its WACC is 12.55%. What percentage of the company's capital structure consists of debt? Round...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at ro -9%, and its common stock currently pays a $3.25 dividend per share (Do - $3.25). The stock's price is currently $25.75, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 35%, and its WACC is 14.55% What percentage of the company's capital structure consists of debt?...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $3.00 dividend per share (Do = $3.00). The stock's price is currently $23.25, its dividend is expected to grow at a constant rate of 4% per year, its tax rate is 35%, and its WACC is 15.65%. What percentage of the company's capital structure consists of...
An investment amount of $10M has to be raised through equity financing and debt financing. The...
An investment amount of $10M has to be raised through equity
financing and debt financing. The required debt ratio is 0.40 and
the company tax rate is 35%.
a) The current market price of the company’s common stock is $50
and the current dividend is $5
and the dividend is expected to grow at 5% annual rate. The
floating cost of issuing a common stock is 10%. Preferred stocks of
$100 par value with 10% fixed annual dividend can also...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is used in the firm's WACC calculation. However, if...
6. Problem 10.11 (WACC and Percentage of Debt Financing) eBook Hook Industries's capital structure consists solely...
6. Problem 10.11 (WACC and Percentage of Debt Financing) eBook Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 10%, and its common stock currently pays a $2.00 dividend per share (Do = $2.00). The stock's price is currently $28.25, its dividend is expected to grow at a constant rate of 6% per year, its tax rate is 25%, and its WACC is 12.90%. What percentage of the company's capital structure...
Consider the following current capital structure and two potential variations to the capital structure for KLM...
Consider the following current capital structure and two potential variations to the capital structure for KLM Corporation: Current Financial Mix 1 Financial mix 2 Proportion of debt 50% 40% 60% Proportion of equity 50% 60% 40% Pre-Tax cost of debt 5.25 5.0% 5.5% Cost of equity 7.9% 7.5% 8.3% Corporate tax rate 30% (a) Calculate the weighted average cost of capital for KLM Corporation under the three separate capital structures, i.e. Current, Mix 1 and Mix 2. Write your answers...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Debt Capital Percentage 100 70 65 50 35 20 Equity Capital Plan Rate, % 15.5 13.5 Percentage Rate% 2 3 4 5 6 30 35 50 65 80 100 7.8 7.8 7.9 9.8 12.5 12.5 10.5 8.5 DE mix...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Rate,% Plan 1 2 3 4 5 6 7 Debt Capital Percentage 100 70 65 50 35 20 Rate, % 17.3 13.4 11.2. 112 9.5 7.4 30 35 50 65 80 100 7.8 7.8 7.9 9.8...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at ro -9%, and its common stock currently pays a $3.25 dividend per share (Do - $3.25). The stock's price is currently $25.75, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 35%, and its WACC is 14.55% What percentage of the company's capital structure consists of debt?...
Problem 10-11 WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $3.00 dividend per share (Do = $3.00). The stock's price is currently $23.25, its dividend is expected to grow at a constant rate of 4% per year, its tax rate is 35%, and its WACC is 15.65%. What percentage of the company's capital structure consists of...
An investment amount of $10M has to be raised through equity
financing and debt financing. The required debt ratio is 0.40 and
the company tax rate is 35%.
a) The current market price of the company’s common stock is $50
and the current dividend is $5
and the dividend is expected to grow at 5% annual rate. The
floating cost of issuing a common stock is 10%. Preferred stocks of
$100 par value with 10% fixed annual dividend can also...
6. Problem 10.11 (WACC and Percentage of Debt Financing) eBook Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 10%, and its common stock currently pays a $2.00 dividend per share (Do = $2.00). The stock's price is currently $28.25, its dividend is expected to grow at a constant rate of 6% per year, its tax rate is 25%, and its WACC is 12.90%. What percentage of the company's capital structure...
Most questions answered within 3 hours.
-
calculate the number of molecules of gas in a
container of 2.0 liter at 30 degrees...
asked 1 minute ago -
The group of companies LC "High-precision measuring instruments"
is the global provider of measurement, analysis and...
asked 2 minutes ago -
I want to write a python function to find the minimum
I have an nested list:...
asked 3 minutes ago -
Convert the high level language programming statementts to 80x86
assembly, Assume X=AX and y=BX
for (i=1;...
asked 12 minutes ago -
SoleMate’s Burkins sneakers cost $40 per pair from the supplier
and are sold by SoleMate at...
asked 16 minutes ago -
The movie Moneyball (based on the book by Michael
Lewis) tells the story of Billy Beane,...
asked 15 minutes ago -
A regional highway uses 8 tollbooths that are open to all
vehicles. A chi-square goodness-of-fit test...
asked 18 minutes ago -
In her Semiannual Monetary Policy Report to Congress on July 13,
2017, then Federal Reserve Chair...
asked 18 minutes ago -
Suppose N packets are sent,
and each packet arrives at rate of L/2R to a link....
asked 37 minutes ago -
17. Show the steps involved in reduction of the ketone in fatty
acid synthesis. Which cofactor...
asked 38 minutes ago -
5.61 g of octane, C8H18, reacts with excess oxygen in a bomb
calorimeter. The heat capacity...
asked 42 minutes ago -
The velocity field of a flow is given by V = (2+1) x
y2 i +...
asked 51 minutes ago