33-Marhaba Company’s capital structure consists entirely of long-term debt and equity. The cost of capital for each component is shown as – before tax cost of debt (kd) 8% and cost of equity (ke) 15%. The proportion of capital for each component is Debt 40% and Equity 60%. What would be weighted average cost of capital of the company? Assume that the corporate tax rate is at 40%. a. 10.92% b. 12.2% c. 10.41% d. 8.88% Clear my choice

Q: A company has the following target capital structure and costs:     Capital structure  Cost of…

A: Post tax cost of debt = 10% x ( 1 - 0.3 )                                        = 7%

Q: 32. ABC Company’s cost of equity is 18%, its before-tax cost of debt is 8%, and its corporate tax…

A: The weighted average cost of capital (WACC) can be calculated by estimating the weight of the…

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A: Value of firm as per M&M proposition is sum of value of unlevered firm and present value of tax…

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A: The weighted normal expense of capital (WACC) is an estimation of a company's expense of capital…

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A: Formula: Weighted Average Cost of Capital = (Cost of Ordinary Stock X Weighted of Ordinary Stock) +…

Q: 7. A firm has 60% of debt and 40% of equity as its capital. The cost of debt is 8%, the cost of…

A: Hey, since there are multiple questions posted, we will answer the first question. If you want any…

Q: Blue Co. is funded only by debt and equity with a weighted average cost of capital at 20%. The debt…

A: Weighted average cost of capital (WACC) = 20% Debt ratio = Weight of debt (Wd) = 20% or 0.2 Weight…

Q: A company's capital structure is 40% debt and 60% equity. The interest cost on its debt is 10% and…

A: Weighted average cost of capital can be used to estimate the rate which should be provided to…

Q: 33. There are two firms: Firm U and Firm L. Both firms have $100M total assets and $16M EBIT…

A: To find the return on equity, the income is divided by the equity of the firm.

Q: GS Co.’s capital structure consists entirely of long-term liabilities and common equity. The cost of…

A: Cost of long term liabilities (Kd) = 0.03 Cost of common equity (Ke) = 0.05 Tax rate (T) = 0.30…

Q: Croft Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its…

A: Common stock ratio (E) = 70% Debt ratio (D) = 30% Cost of equity (Ke) = 16% Cost of debt (Kd) = 8%…

Q: Company A's cost of equity and cost of debt are 14 and 7 percent respectively. The current tax rate…

A: The cost of capital is used as a benchmark for comparing different business decisions. It's a…

Q: A firm’s cost of debt is 6% after tax and cost of equity is 10%. The firm’s investment in asset is…

A: WACC = (Weight of debt * cost of debt) + (Weight of equity * Cost of equity)

Q: A ShanmukhaRao Kosuri Pvt. Ltd. has a target capital structure of 65 percent debt and 35 percent…

A: Here, Equity percentage (w1)  = 35% Debt percentage (w2) = 65% Cost of equity (Ke) = 7.5% Cost of…

Q: ABC Company’s cost of equity is 18%, its before-tax cost of debt is 8%, and its corporate tax rate…

A: Cost of Equity = 18% Before Tax Cost of Debt = 8% Tax Rate = 40% Value of Equity = 1200 Value of…

Q: Intro Munding Corp. has debt with a market value of $23 million and equity with a market value of…

A: Weighted Average Cost Capital means the cost which was borne by the company  in overall terms for…

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A: The provided information are: Common stock = 70% Debt = 30% Cost of equity = 18% Cost of debt = 6%…

Q: 42 A company has P1 million in shareholders' equity and P2 million in debt equity (8% bonds). Its…

A:

Q: A Corporation has P1,500,000 in debt outstanding. The company's before-tax cost of debt is 10%.…

A: Debt (D) = P 1500000 Interest rate = 10% Sales (S) = P 3500000 Net income (NI) = P 600000 60% is…

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A: Formula: Weighted Average Cost of Capital = (Cost of Ordinary Stock X Weightage of Ordinary Stock) +…

Q: What should be the firm’s growth rate in order to attain a weighted average cost of capital of…

A: Dividend discount model refers to a stock valuation model which is used by the company for…

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A: Cost of long term debt = 5% Tax rate = 40% After tax cost of debt (RD) = 5%*(1-0.40)…

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Q: 105-Principles of Financial Manageme 207- My courses / BUSS 105-3-20202 / General / Test-3, BUSS-105…

A: WACC is the weighted average cost of capital which tells the expected return demanded by all the…

Q: ABC Inc. desires to maintain a capital structure of 80% equity and 20% debt. They currently have an…

A: The weighted average cost of capital refers to the rate which the company expects to pay on average…

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A: Weighted average cost of capital is the average of the various cost of capital based on the weights…

Q: 9-16. (Weightea average cost of capital) The capital structure for the ABC Corporation is provided…

A: Solution:- Weighted Average Cost of Capital means the average minimum return required by all the…

Q: The EBIT of the unlevered company is OMR 8,000; value of unlevered company (Vu) is OMR 80,000 and…

A: Net income = EBIT - tax = OMR 8,000 - 8000 x 30% = OMR 5,600

Q: National Co.’s capital structure consists entirely of long-term liabilities and common equity. The…

A: WACC = (Ke*Wk) + (Kd*(1-t)*Wd) Where Ke  = Cost of equity Kd  = Cost of debt Wk = weight of equity…

Q: XYZ Inc. has a target capital structure of 60% equity and 40% debt. Its cost of equity is 9% and the…

A: WACC = Weight of equity * cost of equity + Weight of debt * cost of debt

Q: ABC Inc. desires to maintain a capital structure of 80% equity and 20% debt. They currently have an…

A: Weighted average cost of capital: Weighted average cost of capital is the rate at which the future…

Q: Take It All Away has a cost of equity of 10.75 percent, a pretax cost of debt of 5.41 percent, and a…

A: Weighted Average Cost of Capital(WACC) is calculated by considering the proportionate capital…

Q: 4-What is the weighted average cost of capital for the firm with equal weights of debt and equity…

A: Weighted Average cost of capital calculates the cost of financing the assets of a company. It is…

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A: Weighted average cost of capital can be calculated from different weighted cost of capital of each…

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A: WACC =(cost of debt * market value weight of debt)+ (cost of equity * market value weight of equity)

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A: WACC = [Cost of debt x (1 - tax rate) x debt %] + (Cost of equity x Equity %)

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A: WACC is the total cost of capital structure, calculated by weighted average of cost of each…

Q: (supplying the debt capital) will earn _______________after tax. If the security used to finance the…

A: