Suppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 10percent, while its cost of equity is 15 percent. The appropriate weighted average tax rate is 21 percent.What will be TapDance's WACC? (Round your answer to 2 decimal places.)WACC%< Prev6 of 15Next >

FORMULA OF WACC: WACC=WE×RE+WP×RP+WD×RD×1-TAX where, WE=weight of equityWD=weight of debtWP=weight…

Answered: Suppose that TapDance, Inc.'s capital…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 11EP

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Suppose that TapDance, Inc.’s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance’s WACC? (Round your answer to 2 decimal places.)
Suppose that JB Cos. has a capital structure of 80 percent equity, 20 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.)
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: ___.__%
Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.60 percent, 9.50 percent, and 9.00 percent, respectively.What is MNINK’s WACC if the firm faces an average tax rate of 21 percent and can make full use of the interest tax shield? (Round your answer to 2 decimal places.) WACC: ____.__%
Suppose that B2B, Inc. has a capital structure of 35 percent equity, 16 percent preferred stock, and 49 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 14.0 percent, 10.0 percent, and 9.0 percent, respectively. What is B2B’s WACC if the firm faces an average tax rate of 30 percent? (Round your answer to 2 decimal places.)
Suppose that TipsNToes, Inc.'s capital structure features 75 percent equity, 25 percent debt, and its cost of equity is 12 percent, while its before-tax cost of debt is 10 percent. If the appropriate weighted average tax rate is 20 percent, what will be TipsNToes's after-tax WACC?
Suppose that Tap Dance, Incorporated's capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 7 percent, while its cost of equity is 12 percent. The appropriate weighted average tax rate is 21 percent and TapDance estimates it cannot make any use of the interest tax shield in the foreseeable future. What will be TapDance's WACC? Note: Round your answer to 2 decimal places.
Croft Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 16 percent, and the cost of debt is 8 percent. The relevant tax rate is 24 percent. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Croft Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 18 percent, and the cost of debt is 6 percent. The relevant tax rate is 24 percent. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC:______%
Johansen Corporation has a target capital structure of 60 percent common stock and 40 percent debt. Its cost of equity is 12 percent, and the cost of debt is 6 percent. The relevant tax rate is 30 percent. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
uppose that MNINK Industries’ capital structure features 65 percent equity, 6 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.70 percent, 9.60 percent, and 9.00 percent, respectively.What is MNINK’s WACC if the firm faces an average tax rate of 21 percent and can make full use of the interest tax shield? (Round your answer to 2 decimal places.)
Suppose that TipsNToes, Inc.'s capital structure features 55 percent common equity, 45 percent debt and its cost of equity is 14 percent, while its before-tax cost of debt is 10 percent. It has no preferred stock. If the appropriate tax rate is 20%, what will be TipsNToes's after-tax WACC?

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