Bermuda Cruises issues only common stocks and coupon bonds. The firm has a debt-equity ratio of 0.45. The cost of equity is 17.6 percent.What is the pre-tax cost of the company debt if weighted average costs of the company is 13.5% and the firm's tax rate is 35 percent?

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

Q: Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt-equity ratio of .45.…

A: Given debt equity ratio = 0.45 Debt Equity ratio = Debt / Equity = 0.45 It means that If Equity is…

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A: Weight Debt=30% Common Equity = 70% Cost : Bond =9% Tax =40% WACC= 10.50%

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A: GIVEN, DEBT = $35 EQUITY=$55 rf = 1% beta = 1.23 risk premium = 10.5%

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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: WACC=  (cost of debt after tax + cost of equity)/(value of equity + value of debt)

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A: Data given : Debt-equity ratio = 1.7:1 WACC = 8.1% Cost of debt = 5.7% Corporate tax rate = 23%

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A: When firm does not have debt, cost of equity = WACC.  Firm's cost of equity when it has 25% debt:…

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Q: Bermuda Cruises issues only common stocks and coupon bonds. The firm has a debt-equity ratio of…

A: Given debt equity ratio = 0.45 Debt Equity ratio = Debt / Equity = 0.45 It means that If Equity is 1…

Q: Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt–equity ratio of .85.…

A: The following formula will be used:

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A: WACC is weighted cost of capital considering the weighted after tax cost of debt and weighted cost…

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

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A: In this we have to calculate the cost of equity from WACC of company.

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A: Calculation of cost of capital of common equity

Q: Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred…

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

Q: Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt-equity ratio of .45.…

A: DEBT EQUITY RATIO = 0.45PRE TAX COST OF DEBT = 8.90% COST OF EQUITY = 17.60%TAX = 35%

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

Q: Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred…

A: Computation:

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Q: WACC

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A: a.Calculation of Cost of Equity Capital:The cost of equity capital is 11.51%.

Q: Need help with both questions

A: Calculate the cost of debt as follows:

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