Plants Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Plants Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Plants Corp.'s weighted average cost of capital?

Q: Hooray Company currently has a debt-equity ratio of 1/7. The stock price is $42 and there are…

A: 4) Given: Debt-equity ratio =1/7 Market value of equity = Stock price * Number of shares outstanding…

Q: The Pawlson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its…

A: WACC stands for Weighted Average Cost of Capital, which is defined as the computation of the cost of…

Q: Honeycutt Co. is comparing two different capital structures. Plan I would result in 38,000 shares of…

A: Note: It is a situation where multiple subparts have been asked, so we are allowed to solve the…

Q: MV Corporation has debt with market value of $100 million, common equity with a book value of $100…

A: Weights of different sources of funds could be taken as the proportionate market value of that…

Q: BI's net income is $24,000, its interest expense is $5,000, and its tax rate is 40%.  Its notes…

A: The question is to calculate ROE (Return on Equity)  and ROIC (return on Invested  Capital)  by use…

Q: Bulldogs Inc., which has 20% income tax rate, is funded by debt and common equity. The equity ratio…

A: Calculation of the cost of after tax cost of debt:: We know that weighted average cost of capital is…

Q: Coldstream Corp. is comparing two different capital structures. Plan I would result in 8,000 shares…

A: Given,   Share price in the plan of capitalization=Share value repurchasedRepurchased shares.…

Q: Epiphany is an all-equity firm with an estimated market value of $400,000. The firm sells $225,000…

A: The new equity value would be $400,000 - $225,000 = $175,000. The debt value would be $225,000.

Q: Based on the corporate valuation model, Bizzaro Co.'s value of operations is $300 million. The…

A: Given information: Current value of operations is $300 million, Short term investments of $20…

Q: APT Ltd has debt with a market value of $350,000, preferred stock with a market value of $150,000,…

A: Cost of debt  = Interest rate * (1-tax) Cost of debt = 0.08*(1-0.30) = 0.056 or 5.6% cost of…

Q: Baker Industries’s net income is $24,000, its interest expense is $5,000, andits tax rate is 40%.…

A: NET INCOME  $    24,000.00 COMMON EQUITY   $  250,000.00 INTEREST EXPENSES  $      5,000.00…

Q: Lilly Inc has a DSO of 20 days, and its annual sales are $3,550,000. What is its accounts receivable…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Targaryen Corporation has a target capital structure of 75 percent common stock, 10 percent…

A: Given information: Cost of equity is 10%, Cost of preferred stock is 6%, Pre-tax cost of debt is 7%,…

Q: i Importers’ balance sheet shows $300 million in debt, $50 million in preferred stock, and $250…

A: Weighted average cost of capital includes weight of each debt, equity and preference share.

Q: FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock…

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

Q: Chamin, Inc. has earnings before interest and taxes (EBIT) of $375,000. Chamin has interest expense…

A: The degree of financial leverage shows the effect of fixed financial costs on the earnings of 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: Baker Industries’ net income is $23,000, its interest expense is $4,000, and its tax rate is 45%.…

A: Therefore, the ROE is 9.02%.

Q: ny has a financial break-even point at P163,500. How much is the total preferred dividends to be…

A: Financial break even point is a point where earning per share of the entity is equal to zero.

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: The Paulson Company’s year-end balance sheet is shown below. Its cost of common equity is 14%, its…

A: Weighted average cost of capital is the average rate at which company procures all the funds from…

Q: Sure Firm has a net income after tax of $80,000. The firm paid preferred dividends of $10,000 and…

A: Return on equity = (Net income - preferred dividend) / equity

Q: You have collected the following information about a company: Source of capital Market value Book…

A: Weighted average cost of capital is the weighted average of individual cost of source of capital

Q: Last year Jullan Corp. had sales of P302,225 operating costs of P267,500 and year-end assets of…

A: Ratio is a tool which is used to measure the firm’s performance by establishing relation of…

Q: ang Centers wants to report at least $1.75 in earnings per share. Given the following information,…

A: The best capital structure is determined by determining the desird or standard  debt-equity ratio…

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: Bento, Inc., has a target debt-equity ratio of .65. Its cost of equity is 16 percent, and its cost…

A: Debt to Equity ratio = 0.65 So, let Debt = 65 ; Equity  =100; Total capital  =165 Weight of debt =…

Q: Targaryen Corporation has a target capital structure of 65 percent common stock, 10 percent…

A: The weighted average cost of capital computes the weighted cost of sourcing funds from different…

Q: Gulf Shores Inn is comparing two separate capital structures. The first structure consists of…

A: Calculating the price per share of equity of the company. We have,Let the price of equity share be…

Q: you were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15%…

A: The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which…

Q: Bulldogs Inc. has a financial break-even point at P163,500. How much is the total preferred…

A: Financial breakeven deals with bottom line of company income statement. It is the level of EBIT at…

Q: You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15%…

A: In this question we need to compute the WACC i.e. weighted average cost of capital.

Q: You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15%…

A: The Weighted average cost of capital(WACC) is the average cost of capital, in which each category of…

Q: Coldstream Corp. is comparing two different capital structures. Plan I would result in 10,000 shares…

A: a.Computation of EPS for each of these plans:Hence, the EPS of plan I, plan II, and all equity is…

Q: Tee Corp. has a total long term capital of $980,000; of which 400,000 is long-term debt, $80,000 is…

A: common equity = $980,000 - $80,000 - $400,000 common equity= 500,000

Q: The president and CFO of Spelman Transportation are having a disagreement about whether to use…

A: The question is based on the concept of calculation of weighted average cost of capital (WACC) of a…

Q: The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her…

A: Before tax cost of debt = 11% Tax rate = 20% Preferred stock price (P) = $60 Dividend (D) = $6.40…

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

A: Given, Common stock = 60% Preferred stock = 5% Debt = 35% Cost of equity = 10% Cost of Preferred…

Q: Need help with both questions

A: Calculate the cost of debt as follows: