Question

Asked Nov 6, 2019

22 views

Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 12 percent while its cost of equity is 16 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield.

What will be JB’s WACC? **(Round your answer to 2 decimal places.)**

**WACC: ___.__%**

Step 1

WACC refers to a firm's weighted average cost of capital. It is the rate that a firm pays to its security holders in order to finance its assets.

Step 2

Step 3

Given that;

Cost of equity is 16%

Weight of equity is 78%

Before tax cost of debt is 12%

Weight of d...

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: (Discounted payback period) Gio's Restaurants is considering a project with the following expec...

A: Calculation of Discounted Cumulative Cash Flow by using excel is as follows:

Q: What is Ratio Analysis? Briefly explain

A: Ratio Analysis: It is the procedure of analyzing and looking at money related data by determining im...

Q: This is a continuation of the last problem I sent on Disney in number 3. I need help on problem 4. A...

A: If Disney borrows the investment amount and pays an additional interest of $5 million each year, its...

Q: Savickas Petroleum’s stock has a required return of 12%, and the stock sells for $43 per share. The ...

A: Dividend = $1.00Growth Rate for 4 years = 30 % or 0.3 Calculation of Present Value of Dividend for 4...

Q: The calculation of a hurdle rate when looking capital expenditures involves looking at what financia...

A: Generally companies take up new projects only when the project passes the hurdle rate (HR). As the n...

Q: MMS Corp borrows $1,650,000 today for a new building. The loan is an equal principal payment loan wi...

A: Computation of payment due amount:Hence, the due amount is $20,219.95 or $20,220.

Q: XYZ company has the following expected cash flows for three scenarios that could occur: ...

A: In an levered firm, there is no debt amount therefore no interest amount is payable that is 0. The E...

Q: Campbell Supper Co. paid a $0.672 dividend per share in 2013, which grew to $0.82 in 2016. This grow...

A: Dividend per Share in 2013 (pv) = $0.672Dividend per Share in 2016 (fv) = $0.82Time Period (nper) = ...

Q: Finance Question

A: Answer. Option B. Futures contract require an initial margin requirement be paid.