Blue Co. is funded only by debt and equity with a weighted average cost of capital at 20%. The debt ratio of the company is 20%. Using the discounted cash flow model, the cost of equity is determined at 10%. The applicable after-tax rate of the company is 80%. Determine the cost of debt before the application of the tax shield. (In percentage, put percentage sign)

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: Targaryen Corporation has a target capital structure of 65 percent common stock, 5 percent preferred…

A: Capital structure of Common stock is 65%  Capital structure of Preferred stock is 5% Capital…

Q: Walther enterprises has a capital structure target of 60 percent common equity, 15 percent preferred…

A: Weight of common equity (We) = 60% Weight of preferred stock (Wp) = 15% Weight of long term debt…

Q: Baron Corporation has a target capital structure of 70 percent common stock, 5 percent preferred…

A: In the given question we need to compute the Baron Corporation WACC and after tax cost of debt.

Q: The capital structure of Bulldogs Inc. is comprised of 50% ordinary stock, 25% preferred stock, and…

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

Q: Baron Corporation has a target capital structure of 60 percent common stock, 5 percent preferred…

A: Target Capital Structure = 60% stock, 5% preferred stock, 35% debt Cost of equity = 11% cot of…

Q: Marginal Incorporated (MI) has determined that its before-tax cost of debt is 5.0% for the first $74…

A: Solution: In the given case,calculation of marginal cost of capital will consider cost of internal…

Q: ANB ltd has common equity of $35.5mn and $31.9mn of long-term debt and $10.3mn of preferred equity…

A: The weighted average cost of capital is the rate at which a corporation is anticipated to compensate…

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

A: Answer) Calculation of Applicable Tax Rate Weighted Average Cost of Capital = [(Weightage of Equity…

Q: Swirlpool, Inc. has found that its cost of common equity capital is 18 percent, and its cost of debt…

A: Given, Cost of equity = 18% Cost of debt = 8% After tax cost of debt = 8% * (1-tax rate) After tax…

Q: Baron Corporation has a target capital structure of 60 percent common stock, 5 percent preferred…

A: Given: Cost of equity = 9% Cost of preferred stock = 7% Cost of debt = 8% Tax rate = 21%

Q: Baron Corporation has a target capital structure of 60 percent common stock, 5 percent preferred…

A: Solution: Weighted Average Cost of Capital (WACC) is the minimum rate of return required by the…

Q: Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first $62…

A: Capital Budget = $167 million To be financed through: Debt = 167*325/500 = 108.55 million Preferred…

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: Ninecent Corporation has a target capital structure of 60 percent common stock, 5 percent preferred…

A: Capital Weight Cost of capital before tax Common stock 60% 10% Preferred stock 5% 5% Debt 35%…

Q: Blue Ridge Tours has a cost of equity of 14.28 percent and a pre-tax cost of debt of 8.1 percent.…

A: Given: Cost of equity = 14.28% Pre tax cost of debt = 8.1% Debt-equity ratio =0.60 Tax rate = 34%

Q: Solar Industries has a debt-equity ratio of 1.5. Its WACC is 7.7 percent, and its cost of debt is…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: Sandhill Co. has a capital structure, based on current market values, that consists of 35 percent…

A: Weight Average Cost Of capital  The weighted normal expense of capital (WACC) is a computation…

Q: A company is financed through a loan with a bank at a cost of 10% effective annual rate, before…

A: given, rd=10%re=20%tax = 0.35D/E= 1

Q: Blitz Industries has a debt-equity ratio of 1.7. Its WACC is 8.1 percent, and its cost of debt is…

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

Q: Key Motors has a cost of equity of 14.26 percent and an unlevered cost of capital of 11.34 percent.…

A: levered cost of equity formula: re=ru+DV-D×ru -rd×1-taxwhere,re= levered cost of equityru= unlevered…

Q: A construction company has asked its chief financial officer to measure the cost of each specific…

A: Every business firm requires capital and finance for its development, growth, and operations. Some…

Q: Corporation's after−tax cost of debt is​

A: Given information is: Times​ Corporation, whose tax rate is​ 30%, has two sources of​ funds:…

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: Tencent Corporation has a target capital structure of 70 percent common stock, 5 percent preferred…

A: Given: Particulars Rate Weight Cost of equity 11.000% 70% Preference share cost 5.000% 5%…

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

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

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: PWC Inc. has a policy of distributing 30% of its current year income after interest and taxes. Which…

A: Company's earning after interest and taxes are divided into two parts i.e. dividend payout and…

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: Croft Corporation has a target capital structure of 85 percent common stock and 15 percent debt. Its…

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

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

A: Given that,  cost of common equity capital is 15 percent cost of debt capital is 12 percent common…

Q: Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent…

A: given, we=415wp=4%wd=55%re=19%rp=6.5%rd=7.5%tax= 34%

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: Take It All Away has a cost of equity of 10.57 percent, a pretax cost of debt of 5.29 percent, and a…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: Using the WACC in practice: Maloney’s, Inc., has found that its cost of common equity capital is 17…

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

Q: Johansen Corporation has a target capital structure of 60 percent common stock and 40 percent debt.…

A: Calculation of WACC:The WACC is 8.88%.Excel Spreadsheet:

Q: Wilmore Company Limited is a levered entity with percentage of debt out of total capital being 40%.…

A: The cost of debt is the effective interest rate a company pays on its debt.

Q: The company now makes a further $250,000 issue of debt and uses the proceeds to repurchase equity.…

A: Calculation of  percentage increase in earnings per share after the refinancing Present Debt =…

Q: Abacus Calculation Company and Zoom Calculators Inc. are identical except for capital structures.…

A: Equity:- Equity is the form of shares that is issued by the firm and represents the value that must…

Q: The market value of Glenwood's debt and equity capital totals $180 million, 80% of which is equity…

A: Financial analysts calculate a bank's return on the investment using the weighted average cost of…

Q: Blitz Industries has a debt-equity ratio of 1.2. Its WACC is 7.4 percent, and its cost of debt is…

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

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

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

Q: Tencent Corporation has a target capital structure of 70 percent common stock,5 percent preferred…

A: Particulars Rate Weight Cost of equity 11.000% 70% Preference share cost 5.000% 5% Cost of…

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

A: WACC is the cost of capital for the firm.

Q: Mullineaux Corporation has a target capital structure of 65 percent common stock and 35 percent…

A: WACC = Weight of equity * Cost of equity + Weight of debt * cost of debt * (1-tax rate)

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.