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Co. has a debt to equity ratio of 25% and a weighted average cost of capital at 25%. The firm used the
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- Gs Co. has a debt to equity ratio of 25% and a weighted average cost of capital at 25%. The firm used the capital asset pricing model approach based on the variables readily and reliably available to determine the cost of equity. The weighted cost of equity is 18%. If the applicable tax rate is 30%, the before-tax cost of debt isNational Co. has a debt to equity ratio of 25% and a weighted average cost of capital at 25%. The firm used the capital asset pricing model approach based on the variables readily and reliably available to determine the cost of equity. The weighted cost of equity is 18%. If the applicable tax rate is 30%, the before-tax cost of debt is (Format: XX.XX%)Bulldogs Inc., which is funded by debt and ordinary equity, has a debt to equity ratio of 100%. The weighted average cost of capital of the firm is 20%. Using the capital asset pricing model, the cost of equity is determined to be 30%. If the before-tax cost of debt is 16%, what is the applicable tax rate of Bulldogs Inc.?
- Swirlpool, Inc. has found that its cost of common equity capital is 18 percent, and its cost of debt capital is 8 percent. The firm is financed with 60 percent common shares and 40 percent debt. What is the after-tax weighted average cost of capital for Swirlpool, if it is subject to a 40 percent marginal tax rate?The Bigelow Company has a cost of equity of 12 percent, a pre-tax cost of debt of 7 percent, and a tax rate of 35 percent. What is the firm’s weighted average cost of capital if the proportion of debt is 37.5% and the proportion of equity is 62.5%?Company A is financed by 20% of debt and the rest of the company is financed by common equity. The company’s before-tax cost of debt is 5%, and its cost of equity is 11%. If the marginal tax rate is 30%, the company’s weighted average cost of capital (WACC) is _____.
- Walther enterprises has a capital structure target of 60 percent common equity, 15 percent preferred stock, and 25 percent long-term debt. Walther’s financial analysts have estimated the marginal after tax cost of debt, preferred stock, and common equity to be 5 percent, 8.5 percent, and 11 percent, respectively. What is the weighted marginal cost of capital for Walther?Using the WACC in practice: Maloney’s, Inc., has found that its cost of common equity capital is 17 percent and its cost of debt capital is 6 percent. If the firm is financed with $3,000,000 of common shares (market value) and $2,000,000 of debt, then what is the after-tax weighted average cost of capital for Maloney’s if it is subject to a 40 percent marginal tax rate? 8.96% 11.16% 11.64% 12.60%General Talc Mines has compiled the following data regarding the market value and cost of the specific sources of capital. Source of Capital Before-Tax Cost Long-term debt 8% Common stock equity 19 Market price per share of common stock $50 (7,200 shares outstanding) Market value of long-term debt is $980 per bond (150 bonds issued at $1,000 par) Tax rate is 20%. What is the weighted average cost of capital using market value weights?
- Fama's Llamas has a weighted average cost of capital of 9.7 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 7.4 percent. The tax rate is 25 percent. What is the company's target debt-equity ratio?You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?The calculation of WACC involves calculating the weighted average of the required rates of return on debt, preferred stock, and common equity, where the weights equal the percentage of each type of financing in the firm’s overall capital structure. is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) equation. Wyle Co. has $1.4 million of debt, $2.5 million of preferred stock, and $3.3 million of common equity. What would be its weight on debt? 0.28 0.32 0.19 0.46