Company Beta Debt Equity D/E   Black & Decker 1.4 2500 3000 0.8333333   Fedders 1.2 5 200 0.025   Maytag 1.2 540 2250 0.24   National Presto 0.7 8 300 0.0266667   Whirlpool 1.5 2900 4000 0.725               Private Firm's Leverage Ratio   25%       Marginal Tax Rate   40%       You are valuing a private appliance manufacturing firm and need a beta estimate to find their cost of equity. You decide to instead use the comparable firm approach. 1) Use the average beta and average debt\equity ratio to find an unlevered beta for the peer group. Then, use this estimate of the unlevered beta to find the levered beta of your private company. What are the three determinants of a firm's beta?

Q: Design Interiors has a cost of equity of 14.9 percent and a pretax cost of debt of 8.6 percent. The…

A: Here, Cost of equity = 14.9% Pretax cost of debt = 8.6% Weighted average cost of capital of the firm…

Q: t Ltd has the following balance sheet structure:   Assets     Liabilities and Equity   Assets…

A: In this we have to find weighted average cost of capital using debt and equity.

Q: Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current…

A: Given Information : Current Capital structure  Debt - 40% Equity - 60% Risk-free rate (rRF) - 6%…

Q: A firm wants to create a WACC of 11.4%. The firm's cost of equity is 14.7% and the pre- tax cost of…

A: Weighted Avg. Cost of Capital(WACC) is avg. cost of financing the given capital structure of the…

Q: L. Corp.has determined that its before-tax cost of debt is 9.0%. Its cost of preferred stock is…

A: Given, Before-tax cost of debt = 9% Cost of preferred stock = 10% Cost of internal equity = 15% Cost…

Q: Alfa Corporation (Alfa) has a target capital structure of 60% common stock, 5% preferred stock, and…

A: Weight of Common Stock in capital structure = 60% Weight of Preferred Stock in capital structure =…

Q: Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%.…

A: After tax cost of debt = before tax cost of debt * (1-tax rate) = 4% * (1-0.21) =4% * 0.79 = 3.16%

Q: Calculate the cost of equity: Assuming that there is an unlevered firm and a levered firm. The basic…

A: Unlevered Firm:Net Income = $6,600Value of Equity = Value of Firm = $66,000 Calculation of Cost of…

Q: The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital…

A: Weighted average cost of capital is the overall cost of the company according to the weights given…

Q: Lannister Manufacturing has a target debt-equity ratio of 0.62. Its cost of equity is 18 percent,…

A: Debt-equity ratio is 0.62.The debt can be expressed as:

Q: The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital…

A: The WACC is the sum of proportion of each capital structure multiplied by their respective cost of…

Q: The WACC for a firm is 19.75 percent. You know that the firm is financed with OMR 75 million of…

A: The cost is multiplied by its weight, then the total product costs are added in order to get the…

Q: 33. There are two firms: Firm U and Firm L. Both firms have $100M total assets and $16M EBIT…

A: To find the return on equity, the income is divided by the equity of the firm.

Q: Leverage and Earnings. Reliable Gearing currently is all-equity-financed. It has 10,000 shares of…

A: The debt to equity ratio measures the degree to which a company is financing using debt vs the…

Q: . The money used will be to repurchase shares. Marginal tax rate is 35%. According to m and m…

A: Given  Aceline corp is all equity financed with 15% cost of capital and firm value of 10 million.…

Q: Alfa Corporation (Alfa) has a target capital structure of 60% common stock, 5% preferred stock, and…

A: Weighted Average Cost of Capital (WACC) is the rate at which the company is willing to pay to its…

Q: David Ortiz Motors has a target capital structure of 40% debt and 60%equity. The yield to maturity…

A: Given information: Capital structure of the company Debt is 40% Equity is 60%, Yield to maturity of…

Q: There are two firms: Firm U and Firm L. Both firms have $100M total assets and $15M EBIT (eamings…

A: Return on Equity can be calculated as follows. Return on Equity = (Profit available for equity /…

Q: Please show the solution. Thank you.  1. Gateway Inc. has a weighted average cost of capital of…

A: Company's Growth Rate:-Company's growth rate depends on the variable over a specific period of time.…

Q: What should be the firm’s growth rate in order to attain a weighted average cost of capital of…

A: Dividend discount model refers to a stock valuation model which is used by the company for…

Q: New stock (before-tax debt) L. Corp. has determined that its before-tax cost of debt is 9.0%. Its…

A: The Weighted Average Cost of Capital (WACC) of a company is the total cost of capital, including…

Q: Consider a firm with an EBIT of P552,000. The firm finances its assets with P1,020,000 debt (costing…

A: EPS (Earning Per Share)  = Net Income / Outstanding Shareholder's

Q: The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital…

A: Given:

Q: Problem 3. Humble Manufacturing is interested in measuring its overall cost of capital. The firm is…

A: Financing is referred to as the process of providing finance or funds to the business through…

Q: Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current…

A: Levered beta will be different at different capital structure. Hence, levered beta at current…

Q: A firm has a debt-equity ratio of 0.5 and a cost of debt of 5 percent. The industry average cost of…

A: Given,  Debt equity ratio is 0.5. Cost of debt is 5% Cost of unlevered equity is 15%

Q: Consider a firm with an EBIT of P552,000. The firm finances its assets with P1,020,000 debt (costing…

A: The term EBIT stands for earnings before interest and tax, and this is the income that the company…

Q: Counts Accounting has a beta of 1.50. The tax rate is 35%, and Counts is financed with 40% debt.…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…

Q: capital

A: WACC = Weight of Debt * Cost of debt + Weight of preferred stock * Cost of preferred stock + Weight…

Q: Jungle, Inc. has a target debt-equity ratio of 0.72. Its WACC is 11.5 percent and the tax rate is 34…

A: Target debt equity ratio = 0.72 WACC = 11.5% Tax rate = 34% After tax cost of debt = 5.5%

Q: Wentworth's Five and Dime Store has a cost of equity of 11.9 percent. The company has an aftertax…

A: WACC = (Weight of debt *after tax cost of debt) +  (Weight of equity * Cost of equity) debt to…

Q: Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%.…

A: a. Calculate the cost of equity of the company in following way:   Debt to equity ratio = 1.5 Weight…

Q: David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity…

A: Given: Capital structure: Debt = 40% Equity = 60% Long term debt security = 9% Tax rate = 40% WACC…

Q: VanMannen Foundations, Inc. (VF) VanMannen Foundations, Inc. (VF) is a zero-growth company that…

A: WACC is called as the Weighted average cost of the capital of any firm. It takes both Cost of equity…