94. Glass Growers has no debt. Its cost of capital is 8.7 percent. Suppose the firm converts to a debt-equity ratio of 0.65. The interest rate on the debt is 6.9 percent. What is its new WACC?
Q: You were hired as a consultant to XYZ Company, whose target capital structure is 30% debt, 8%…
A: target capital structure:Proportion of debt = Wd = 30%Proportion of preferred capital = Ws = 8%…
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A: given, Debt/Equity ratio = 1 cost of debt =8%
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A: Debt-equity ratio is 0.62.The debt can be expressed as:
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A: Debt to equity ratio is 2.3, therefore, debt to total value (D/V) = 2.3/(1+2.3) = 0.696969696969697.…
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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
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A: Value of Firm: It is the value of creditors' and shareholders' claims altogether. NOTE: As per…
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A: WACC = Weight in Equity * Cost of equity + Weight in debt *Cost of debt * (1- tax)
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A: Cost of debt = 6.2% Cost of equity = 13.3% Debt-equity ratio = 0.96 Debt-asset ratio = Debt equity…
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A: EPS (Earnings Per Share): It is the profit made by the company for each share of stock. Thus, it is…
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A: Debt-equity ratio is 2.3. The debt can be expressed as:
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A: Weighted cost of capital (WACC) is the average cost of capital raised through various sources of…
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A: Target debt to equity = 0.62Therefore,Debt to total asset (D/V) = 0.62/1.062 =…
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A: Given, Debt equity ratio is 0.5. Cost of debt is 5% Cost of unlevered equity is 15%
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A: Unlevered beta =Levered beta /1+D/E(1-t)
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A: Given: Cost of equity = 12.3% YTM = 5.8% Tax rate = 39% Debt to equity = 0.58
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Q: what is the weighted average cost of capital?
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A: after tax cost of debt = before tax cost of debt * (1-taxrate)
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A: given, ru=10%re=12%tax=30%rd= 6%
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- Starset, Incorporated, has a target debt-equity ratio of 0.76. Its WACC is 10.5 percent, and the tax rate is 32 percent. If the company's cost of equity is 14.5 percent, what is the pretax cost of debt? If instead you know that the aftertax cost of debt is 6.7 percent, what is the cost of equity?Butler, Inc., has a target debt-equity ratio of 1.40. Its WACC is 9.5 percent, and the tax rate is 23 percent. a. If the company’s cost of equity is 13.3 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If instead you know that the aftertax cost of debt is 5.5 percent, what is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Pretax cost of debt:____% b. Cost of equity:____%Ursala, Incorporated, has a target debt-equity ratio of 1.20. Its WACC is 8.7 percent, and the tax rate is 25 percent. a. If the company’s cost of equity is 13 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If instead you know that the aftertax cost of debt is 5.8 percent, what is the cost of equity?
- Starset, Inc., has a target debt-equity ratio of .80. Its WACC is 9.1 percent, and the tax rate is 25 percent. a.If the company's cost of equity is 13 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b.If instead you know that the aftertax cost of debt is 5.8 percent, what is the cost of equity?Bac Corp. has no debt but can borrow at 6.4 percent. The firm’s WACC is currently 10.2 percent, and the tax rate is 35 percent. (SHOW YOUR WORK) What is the company’s cost of equity? If the firm converts to 25 percent debt, what will its cost of equity be? If the firm converts to 50 percent debt, what will its cost of equity be? What is the company’s WACC in part (b)? In part (c)?Shadow Corp. has no debt but can borrow at 7.9 percent. The firm's WACC is currently 9.7 percent, and the tax rate is 23 percent. a. c. What is the firm's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the firm converts to 35 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) If the firm converts to 50 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-1. If the firm converts to 35 percent debt, what will the company's WACC be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-2. If the firm converts to 50 percent debt, what will the company's WACC be? (Do not round intermediate calculations and…
- Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22 percent. a. If the company’s cost of equity is 12 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If instead you know that the aftertax cost of debt is 5.8 percent, what is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)A company currently has a WACC of 10.6 percent and no debt. The tax rate is 21 percent. a. What is the company’s current cost of equity? b. If the firm converts to 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC? c. If the firm converts to 60 percent debt with a cost of 6% , what will its cost of equity be? And the WACC? d. What can you conclude from the values of the cost of equity and WACC obtained in b. and c. Please show excel formulasUrsala, Incorporated, has a target debt-equity ratio of 1.25. Its WACC is 8.4 percent and the tax rate is 23 percent. If the company’s cost of equity is 12.4 percent, what is its pretax cost of debt? If instead you know that the aftertax cost of debt is 3.6 percent, what is the cost of equity?
- Lamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current market value of the equity is $2.3 million and there are no taxes. According to M&M Proposition I, what will be the value of the company if it changes to a debt-equity ratio of .85?Lannister Manufacturing has a target debt-equity ratio of 0.62. Its cost of equity is 18 percent, and its cost of debt is 11 percent. If the tax rate is 33 percent, what is the company's WACC?Lannister Manufacturing has a target debt-equity ratio of 0.66. Its cost of equity is 16 percent, and its cost of debt is 10 percent. If the tax rate is 31 percent, what is the company's WACC? Multiple Choice 9.99% 10.52% 12.38% 11.76% 13%