1) Caddie Manufacturing has a target debt-equity ratio of .75. Its cost of equity is 10 percent, and its pretax cost of debt is 6 percent. If the tax rate is 22 percent, what is the company’s WACC? 2) Gnomes R Us is considering a new project. The company has a debt-equity ratio of .76. The company’s cost of equity is 14.8 percent, and the aftertax cost of debt is 8.1 percent. The firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of +4 percent. What is the company’s WACC? What discount rate should the firm use for the project?

Q: Starset, Incorporated, has a target debt-equity ratio of 0.76. Its WACC is 10.5 percent, and the tax…

A: Pretax cost of debt can be calculated through the WACC equation and debt-equity ratio. Here…

Q: What is the cost of capital using mortgage bonds and internal equity?

A: Given, Capital Structure  Debt = 40% Equity = 60% Tax rate = 34%

Q: Alpha Inc. has a target debt-to-value ratio of .6. The pretax cost of debt is 10 percent, the tax…

A: Debt to Equity ratio =Debt to Value Ratio/(1-debt to Value Ratio)  Levered Cost of Equity =Unlevered…

Q: Butler, Inc., has a target debt-equity ratio of 1.40. Its WACC is 9.5 percent, and the tax rate is…

A: WACC = (cost of equity * weight of equity) + (after tax cost of debt * weight of debt)weight of…

Q: capital structure. Right now, LG has a capital structure that consists of 20 percent debt and 80…

A:

Q: Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity,…

A: Internal equity refers to the owner’s equity. It also includes the profits and retained earnings of…

Q: An unlevered firm has a cost of capital of 11.3 percent and a tax rate of 34 percent. The firm is…

A: We need to calculate weighted average cost of capital(WACC) which will be the firm's levered cost of…

Q: What is Walkeshewar's WACC if it's equity costs 11.8 percent, the cost of it's debt is 6.3 percent,…

A: WACC (weighted average cost of capital) refers to the average cost that is paid by a company to…

Q: Majan Mining has found that its cost of common equity capital is 15 percent and its cost of debt…

A: Cost of Equity Capital = 15% Cost of Debt = 12% Tax Rate = 35% After tax cost of debt = Cost of Debt…

Q: Marginal Incorporated (MI) has determined that its before-tax cost of debt is 10.0%. Its cost of…

A: (in million dollar) weight (%) Capital required(in million dollar) Value of debt 372 62 181.66…

Q: Theresa’s belongs to Harvester, which has expected earnings before interest and tax (EBIT) of…

A: The question is related to Capital Structure. MM Approach corporate taxes:- MM later recognizes the…

Q: Salalah Mineral water has found that its cost of common equity capital is 18 percent, and its cost…

A: re=18%rd=8%we=60%wd=40%tax= 40%

Q: Commonwealth Construction (CC) needs $3 million of assets to get started, and it expects to have a…

A: Case 1- Debt is 60% Given Total Assets = $3,000,000 Interest rate = 12% Tax rate = 30% Basic earning…

Q: King’s Corp has determined that its before-tax cost of debt is 9.0%. Its cost of preferred stock is…

A: The question is based on the concept of Financial Accounting.

Q: Sixx AM Manufacturing has a target debt-equity ratio of 0.7. Its cost of equity is 17 percent, and…

A: WACC = Weight of debt * Cost of debt + Weight of equity * Cost of equity Cost of debt = Cost * ( 1 -…

Q: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…

A: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…

Q: Bay Beach Industries wants to maintain their capital structure of 40% debt and 60% equity. The…

A: The weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…

Q: CoffeeCarts has a cost of equity of 15%, has a pre-tax cost of debt of 4%, and is financed 70% with…

A: Given details are : Cost of Equity (Ke) = 15% Pre tax cost of debt (Kd) = 4% Weight of Equity = 70%…

Q: Majan Mining has found that its cost of common equity capital is 15 percent and its cost of debt…

A: Introduction The Weighted Average Cost of Capital (WACC) of a company is the total cost of capital,…

Q: Fusion Packaging is financed with 55% equity and 45% debt.  The required rate of return on its debt…

A: Weight of equity (We) = 55% Weight of debt (Wd) = 45% Cost of debt (Rd) = 4.4% Cost of equity (Re) =…

Q: Williamson, Inc., has a debt-equity ratio of 3. The firm's weighted average cost of capital is 12…

A: The Weighted Average Cost of Capital WACC is calculated with the help of following formula  WACC =…

Q: Lannister Manufacturing has a target debt-equity ratio of 0.66. Its cost of equity is 16 percent,…

A: Weighted average cost of capital can be calculated as: = (Weight of equity * Cost of equity) +…

Q: Majan Mining has found that its cost of common equity capital is 15 percent and its cost of debt…

A: The cost of capital is the cost that is incurred by a corporation on the acquisition of capital from…

Q: Miller Manufacturing has a target debt-equity ratio of .55. Its cost of equity is 14 percent, and…

A: Here, Target debt-equity ratio = 0.55 Cost of equity =14% Cost of debt = 7% Tax rate = 35% To Find:…

Q: Company A is financed by 20% of debt and the rest of the company is financed by common equity. The…

A: Given: Debt (% of capital structure) 20% Before-tax cost of debt 5% Cost of equity 11%…

Q: Company A is financed with 90 percent debt, whereas Company B, which has the same amount of total…

A: Return on assets is a ratio that helps in determining the amount of profit or earnings earned by the…

Q: Bento, Inc., has a target debt-equity ratio of .65. Its cost of equity is 16 percent, and its cost…

A: Debt to Equity ratio = 0.65 So, let Debt = 65 ; Equity  =100; Total capital  =165 Weight of debt =…

Q: Suppose that TapDance, Inc.’s capital structure features 70 percent equity, 30 percent debt, and…

A: To calculate the WACC we will use the below formula   WACC = [Kd*(1-t)*Wd]+[Ke*We] Where Kd - Before…

Q: Salalah Mineral water has found that its cost of common equity capital is 18 percent, and its cost…

A: WACC = ∑Wi*KI W is weight and K is cost of component Post tax cost of debt is used for after tax…

Q: Suppose that TapDance, Inc.'s capital structure features 60 percent equity, 40 percent debt, and…

A: Equity ratio = 60% Debt ratio = 40% Cost of equity = 11% Before tax cost of debt = 6% Tax rate = 21%…

Q: Precision Cuts has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its…

A: To calculate the WACC we will use the below formula   WACC = (Ke*We)+[Kd*(1-t)*Wd]   Where Ke - Cost…

Q: Lucas Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost…

A: Floatation Cost : It is a cost or charges which is incurred in the issue of new securities like…

Q: Seattle Health Plans currently uses zero-debt financing. Its operating profit is $1 million, and it…

A: Capital structure can be defined as the structure that depicts the proportion of debt and equity…

Q: Lannister Manufacturing has a target debt-equity ratio of 0.62. Its cost of equity is 18 percent,…

A: Target debt to equity = 0.62Therefore,Debt to total asset (D/V) = 0.62/1.062 =…

Q: Sheaves Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost…

A: The question is based on the concept of Valuation.

Q: Kountry Kitchen has a cost of equity of 12.5 percent, a pretax cost of debt of 5.8 percent, and the…

A: Cost of equity, Ke = 125%,Pretax cost of debt, Kd = 5.8%Tax rate, T = 35%WACC = 9.16%Let's assume…

Q: Take It All Away has a cost of equity of 11.05 percent, a pretax cost of debt of 5.40 percent, and a…

A:

Q: Ivanhoe Resources Company has a WACC of 12.0 percent, and it is subject to a 40 percent marginal tax…

A:

Q: Lannister Manufacturing has a target debt-equity ratio of 85. Its cost of equity is 10 percent, and…

A: WACC or Weighted Average Cost of Capital - Usually a company gets capital from different sources,…

Q: Viserion, Incorporated, is trying to determine its cost of debt. The firm has a debt issue…

A: Coupon rate is 6% Coupon frequency is semi annual Price of bond is 106% Face value is $1000 Time…

Q: Commonwealth Construction (CC) needs $3 million of assets to get started, and it expects to have a…

A: Since you have posted multiple questions, we will answer the first one for you. If you want a…

Q: Need help with both questions

A: Calculate the cost of debt as follows:

Q: Sixx AM Manufacturing has a target debt-equity ratio of 0.65. its cost of equity is 15%, and its…

A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…

Q: Tool Manufacturing has an expected EBIT of $89,000 in perpetuity and a tax rate of 25 percent. The…

A: Unlevered firm is that firm or company, which does not take debt for the funding purpose. Levered…

Q: Bulldogs Inc., which is funded by debt and ordinary equity, has a debt to equity ratio of 100%. The…

A: The cost of debt is tax-deductible and hence its effective cost is different.