David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield...
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 21%. Ortiz's CFO has calculated the company's WACC as 12%. What is the company's cost of equity capital?
Homework Answers
WACC = Weight of debt * Pretax cost of debt * (1 - Tax) + Weight of Equity * Cost of Equity
12% = 40% * 9% * (1 - 21%) + 60% * Cost of Equity
12% = 2.844% + 60% * Cost of Equity
Cost of Equity = 15.26%
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David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield...
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield...
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.49%. What is the company's cost of equity capital? Round your answer to two decimal places.
David Ortiz Motors has a target capital structure of 40% debtand 60% equity. The yield...
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 7%, and the company's tax rate is 25%. Ortiz's CFO has calculated the company's WACC as 8.1%. What is the company's cost of equity capital? Round your answer to the nearest whole number.
David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield...
David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 10%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 8.97%. What is the company's cost of equity capital? Round your answer to two decimal places.
Problem 9-8 WACC David Ortiz Motors has a target capital structure of 45% debt and 55%...
Problem 9-8 WACC David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 8%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.02%. What is the company's cost of equity capital? Round your answer to two decimal places. O®% Hide Feedback
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no...
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 12%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.40%. What is Pearson's cost of common equity?
Percy Motors has a target capital structure of 40% debt and 60% common equity, with no...
Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 8.96%. What is Percy's cost of common equity? A) 9% B) 11.33% C) 14% D) 12.98% E) 10.21%
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no...
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 12.90%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no...
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.40%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no...
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 10%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 13.80%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no...
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 12.60%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. ______%
Problem 9-8 WACC David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 8%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.02%. What is the company's cost of equity capital? Round your answer to two decimal places. O®% Hide Feedback
Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 8.96%. What is Percy's cost of common equity? A) 9% B) 11.33% C) 14% D) 12.98% E) 10.21%
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 12.90%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %
Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.40%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
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