Bolero Corporation has one long term loan (interest bearing debt) of $700,000 at an interest rate of 8%.  The company has accounts payable of $300,000 (non-interest bearing) and equity of $1,000,000.  It estimates that its cost of equity is 16%.  Its tax rate is 35%.  A. What is the company’s weighted average cost of capital on interest bearing debt and equity? B. What is Bolero Corporation’s weighted average cost of capital on all liabilities and equity (or total invested capital)?

Q: Buggins Inc. is financed equally by debt and equity, each with a market value of $1 million. The…

A: given information market value = 1 million  cost of debt = 5% cost of equity = 10% company make a…

Q: Ignacio, Inc., had after-tax operating income last year of $1,196,500. Three sources of financing…

A: Given, Net operating profit = $1,196,500 Mortgage bonds rate = 4% or 0.04 Unsecured bonds rate = 6%…

Q: The financial breakeven point of Soillnc. is P90,000,while the tax rate applicable to the company is…

A: The financial breakeven can be calculated by using this equation EBITFinBE =Interest cost +Preffered…

Q: Antwerp Co. has a debt-to-equity ratio of 1.4, a corporate tax rate of 30%, pays 4% interest on its…

A: Data given: Debt-to-equity ratio = 1.4  i.e., D/E= 1.4 Working Note #1 D/E= 1.4 1+D/E = 1+1.4…

Q: The tax rate applicable to Blue Co. is 20%. The firm pays 5% interest on the P350,000 outstanding…

A: Outstanding loan = P 350000 Interest rate = 5% Tax rate = 20% Preferred dividends = P 16500

Q: The W.C. Corp. has $600,000 of interest-bearing debt outstanding, and it pays an annual interest…

A:

Q: Skolits Corp. has a cost of equity of 11.8 percent and an aftertax cost of debt of 4.44 percent. The…

A: Weighted Average Cost of Capital is defined as financial metric, which used to help in the…

Q: he Duval Corporation has recently reported the following information: Net income…

A: Formulas:

Q: Fama's Llamas has a weighted average cost of capital of 9.5 percent. The company's cost of equity is…

A: Calculation of Target Debt-Equity Ratio:The target debt-equity ratio is 0.91.Excel Spreadsheet:

Q: Fama's Llamas has a weighted average cost of capital of 10 percent. The company's cost of equity is…

A: Debt-Equity Ratio is long-term solvency ratio of company. It is calculated by dividing debt by…

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: Blue Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is…

A: FCF1 = P 150,000,000 Growth rate (g) = 4% Debt to equity (D/E) = 0.25 Cost of debt = Rd = 5% Cost of…

Q: Vanderheiden Press Inc. and Herrenhouse PublishingCompany had the following balance sheets as of…

A: The Vanderheiden Press Inc. and Herrenhouse Publishing with the balance sheets as of December 31,…

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: A company has 35% of its balance sheet as debt with a total amount of assets of EUR 17,000,000.If…

A: Weight of debt = 35% Weight of equity = 100% - 35% = 65%

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: The Bigelow Company has a cost of equity of 12 percent, a pre-tax cost of debt of 7 percent, and a…

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

Q: Russell Securities has $100 million in total assets and its corporate tax rate is 40 percent.  The…

A: Before we get into the question, let's understand the two ratios involved in the question:1. BEP =…

Q: KN Stitches has debt of $26,000, a leveraged value of $78,400, a pretax cost of debt of 7.05…

A: WACC formula: WACC=WE×KE+WD×KD×1-TAXWHERE,WE=WEIGHT OF EQUITYWD=WEIGHT OF DEBTKE=COST OF…

Q: Planet Express has liabilities of $400 and assets of $1000. The average YTM on its debt is 10% and…

A: FORMULA FOR WACC: WACC=WP×KP+WD×KD×1-TAX WHERE, WD=weight of debtwp=weight of preferred sharekd=cost…

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: In the past year, TVG had revenues of $2.95 million, cost of goods sold of $2.45 million, and…

A: Times Interest Earned = Earnings Before Interest and Tax/ Interest Expense

Q: Outlet has an unlevered cost of capital of 14.2 percent, a tax rate of 35 percent, and expected…

A: Value of Unlevered Firm = EBIT*(1-tax rate)/unlevered cost of capital  = [23400*(1-35%)]/14.2% =$…

Q: The H.R. Pickett Corp. has $500,000 of debt outstanding, and it pays an annual interest rate of 10%.…

A: The times earned interest ratio is comparing the earnings before interest and taxes to interest…

Q: Buggins Inc. is financed equally by debt and equity, each with a market value of $1 million. The…

A: The question is related to Cost of capital. It is given that the present capital structure consists…

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: Alpha Resources has sales revenue of $800,000, operating costs of $400,000, and depreciation expense…

A: Sales = $800,000 Operating cost = $400,000 Depreciation = $20,000 Bonds = $300,000 Interest rate =…

Q: Nike, Inc., has a debt-equity ratio of 2.3.  The firm's weighted average cost of capital is 10…

A: Debt-equity ratio is 2.3. The debt can be expressed as:

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: uses the cost

A: The amount which is invested by the proprietor or partner in the business is known as capital. The…

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: 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: A firm has a debt-to-equity ratio of 50 percent. Currently, it has interest expense of 500,000 on…

A: Computation of total equity is as follows: Debt to Equity Ratio=50%Debt to Equity Ratio=Total…

Q: Fama's Llamas has a weighted average cost of capital of 9.7 percent. The company's cost of equity is…

A:

Q: Russell Securities has $100 million in total assets and its corporate tax rate is 40 percent. The…

A: Total assets =$100 million  BASIC EARNING POWER =15% Tax=40% RETURN ON ASSETS =9

Q: The tax rate applicable to Blue Co. is 20%. The firm pays 5% interest on the P350,000 outstanding…

A:

Q: Buggins Inc. is financed equally by debt and equity, each with a market value of $1 million. The…

A: It is given that :before refinancing :equity = debt = $1,000,000 Cost of debt – 5% Cost of equity…

Q: Lamas has a weighted average cost of capital of 8.4 percent. The company's equity is II percent, and…

A: The debt Equity ratio states how much debt the company has in its capital structure. Generally the…

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: The Two Dollar Store has a cost of equity of 12.3 percent, the YTM on the company's bonds is 5.8…

A: Given: Cost of equity = 12.3% YTM = 5.8% Tax rate = 39% Debt to equity = 0.58

Q: Waldorf Company has two sources of​ funds: long−term debt with a market and book value of​…

A: Economic value added is a measure of company's performance and is calculated by making deductions of…

Q: Last year Gray Corp. had net sales of $325,000 and a net income of $19,000, and its year-end assets…

A: Given, Sales = $325,000 Assets = $250,000 Net Income = $19,000 Debt-to-total-capital ratio = 45%

Q: Cha Cha Corporation has three long term loans (interest bearing debt):  a loan of $100,000 at 6%…

A: Given, interest bearing debt: 6% loan of $100,000 8% loan of $100,000 14% loan of $100,000 Equity of…