Marginal Incorporated (MI) has determined that its after-tax cost of debt is 7.0%. Its cost of...
Marginal Incorporated (MI) has determined that its after-tax cost of debt is 7.0%. Its cost of preferred stock is 15.0%. Its cost of internal equity is 19.0%, and its cost of external equity is 24.0%. Currently, the firm's capital structure has $470 million of debt, $90 million of preferred stock, and $440 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $58 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $195 million?
Homework Answers
Marginal cost of capital is given as equal
to=(470*7%+90*15%+440*24%)/(470+90+440)=15.20%
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Marginal Incorporated (MI) has determined that its after-tax
cost of debt is 7.0%. Its cost of...
Question 26 (3.5 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is...
Question 26 (3.5 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 10.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $50 million of preferred stock, and $125 million of common equity. The firm's marginal tax rate is 45%. The firm is currently making projections for the next period. Its managers have...
Question 24 (4 points) Marginal Incorporated (MI) has determined that its before-tax cost of debt is...
Question 24 (4 points) Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0 % Its cost of preferred stock is 14.0 %. Its cost of internal equity is 16.0%, and its cost of external equity is 21.0%. Currently, the firm's capital structure has $621 million of debt, $45 million of preferred stock, and $234 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its...
Question 25 (4 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is...
Question 25 (4 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first $62 million in bonds it issues, and 7.0% for any bonds issued above $62 million. Its cost of preferred stock is 12.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $70 million of preferred stock, and $105 million of common equity. The firm's...
Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first...
Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first $58 million in bonds it issues, and 8.0% for any bonds issued above $58 million. Its cost of preferred stock is 15.0%. Its cost of internal equity is 17.0%, and its cost of external equity is 21.0%. Currently, the firm's capital structure has $530 million of debt, $150 million of preferred stock, and $320 million of common equity. The firm's marginal tax rate is...
King’s Corp has determined that its before-tax cost of debt is 9.0%. Its cost of preferred...
King’s Corp has determined that its before-tax cost of debt is 9.0%. Its cost of preferred stock is 12.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 17.0%. Currently, the firm's capital structure has $600 million of debt, $50 million of preferred stock, and $350 million of common equity. The firm's marginal tax rate is 40%. The firm is currently making projections for next period. Its managers have determined that the firm should have...
A firm has determined its target capital structure and it after-tax cost for each source of...
A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Cost 49 Source of Capital Long-term Debt (after taxes) Preferred Stock Common Stock Proportion 30% 10% 60% 10% 16% Your Answer: Answer Hide hint for Question 11 Weight average cost of capital= weight of long-term debt cost of debt(after tax)+weight of preferred...
A firm has an effective (after-tax) cost of debt of 5%, and its weight of debt is 40%
1 A firm has an effective (after-tax) cost of debt of 5%, and its weight of debt is 40%. Its equity cost of capital is 12%, and its weight of equity is 60%. Calculate the firm's weighted average cost of capital (WACC). [Enter your answer as a percentage rounded to two decimal places.] 2 In which one of the following situations would the payback method be the preferred method of analysis? 1) A project that can easily be expanded 2) Two mutually exclusive...
A firm has determined its optimal capital structure which is composed of the following sources and...
A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Additionally, the firm's marginal tax rate is 40 percent Source of Capital Long-term debt Preferred stock Common stock equity Market Proportions 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent annual bond for $880. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will...
A firm has determined its target capital structure and it after-tax cost for each source of...
A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Cost Proportion 30% Source of Capital Long-term Debt (after taxes) Preferred Stock Common Stock 6096 Your Answer: Answer
Question 7 (1 point) A firm has determined its target capital structure and it after-tax cost...
Question 7 (1 point) A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Source of Capital Proportion Cost Long-term Debt (after taxes) 30% 3% Preferred Stock 10% 9% Common Stock 60% 14% Your Answer: Answer Page 2 of 3 Next Page
Question 26 (3.5 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 10.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $50 million of preferred stock, and $125 million of common equity. The firm's marginal tax rate is 45%. The firm is currently making projections for the next period. Its managers have...
Question 24 (4 points) Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0 % Its cost of preferred stock is 14.0 %. Its cost of internal equity is 16.0%, and its cost of external equity is 21.0%. Currently, the firm's capital structure has $621 million of debt, $45 million of preferred stock, and $234 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its...
Question 25 (4 points) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first $62 million in bonds it issues, and 7.0% for any bonds issued above $62 million. Its cost of preferred stock is 12.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $70 million of preferred stock, and $105 million of common equity. The firm's...
A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Cost 49 Source of Capital Long-term Debt (after taxes) Preferred Stock Common Stock Proportion 30% 10% 60% 10% 16% Your Answer: Answer Hide hint for Question 11 Weight average cost of capital= weight of long-term debt cost of debt(after tax)+weight of preferred...
A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Additionally, the firm's marginal tax rate is 40 percent Source of Capital Long-term debt Preferred stock Common stock equity Market Proportions 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent annual bond for $880. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will...
A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Cost Proportion 30% Source of Capital Long-term Debt (after taxes) Preferred Stock Common Stock 6096 Your Answer: Answer
Question 7 (1 point) A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firm's weighted average cost of capital (WACC)? (Enter your answers as a percentge rounded to 2 decimal places) Source of Capital Proportion Cost Long-term Debt (after taxes) 30% 3% Preferred Stock 10% 9% Common Stock 60% 14% Your Answer: Answer Page 2 of 3 Next Page
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