Homework #6G (WACC) 4

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Check my work Evans Technology has the following capital structure. Debt Common equity 25% 75 The aftertax cost of debt is 7.00 percent, and the cost of common equity (in the form of retained earnings) is 14.00 percent. a. What is the firm's weighted average cost of capital? (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost Debt Common equity Weighted average cost of capital 0.00 % An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. EGO 152 APA ttv MacBook Air

QUESTION 1 (40 marks) Nona Corporation is interested in measuring the cost of each specific type of capital as well as the weighted average cost of capital.. Historically, the firm has raised capital in the following manner: Table of Source of Capital and Its Weight Source of Capital Weight Long Term Debt 15% Preferred Stock 25% Common Stock Equity 40% The tax rate of the firm is currently 40%. The needed financial information and data are as follows: Debt Nona can raise debt by selling RM1,000 par-value, 8.5% coupon interest rate, 10-year bonds on which annual interest payments will be made. To sell the issue, an average discount of RM15 per bond needs to be given. There is an associated flotation cost of 2% of par value. Prefered stock Preferred stock can be sold under the following terms: The security has a par value of RM100 per share, the annual dividend rate is 7% of the par value, and the flotation cost is expected to be RM5 per share. The preferred stock is expected to sell for…

A firm’s current balance sheet is as follows: Assets $ 110   Debt $ 22         Equity $ 88 What is the firm’s weighted-average cost of capital at various combinations of debt and equity, given the following information? Round your answers to one decimal place.   Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0 % 8 % 12 %   % 10   8   12     % 20   8   12     % 30   8   13     % 40   9   14     % 50   10   15     % 60   12   16     %   Construct a pro forma balance sheet that indicates the firm’s optimal capital structure. Choose the best structure from the options analyzed in part a. Compare this balance sheet with the firm’s current balance sheet. Round your answers to the nearest dollar.   Assets $ 110   Debt   $           Equity   $     What course of action should the firm take? Round your answer to the nearest whole number. Since the firm is currently using   % debt financing, it  at its optimal capital structure and  As a…

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As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of variouscompanies given the following information. Income tax rate is 25% a. What is the cost of equity of each companies?b. What is the after tax cost of debt of each companies?c. What is the WACC of each companies?   W Corp A Corp Co. Corp Ca Corp Risk Free rate 4.00% 3.00% 2.00% 3.50% Beta 1.25 % 1.50% 1.30% 1.40% Market Return 12.00% 11.00 % 10:00% 8:00% Debt to Equity Ratio 2.5 3 4 3.5 Credit Spread om BPS 200 300 250 150

What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt. Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % 1 million. $ 35 7.68% $14 million 9% 7% 0.75 7.0% 40%

A firm’s current balance sheet is as follows: Assets $ 110   Debt $ 44         Equity $ 66 What is the firm’s weighted-average cost of capital at various combinations of debt and equity, given the following information? Round your answers to one decimal place.   Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0 % 6 % 13 %   % 10   6   13     % 20   6   13     % 30   7   14     % 40   8   15     % 50   9   16     % 60   11   17     %   Construct a pro forma balance sheet that indicates the firm’s optimal capital structure. Choose the best structure from the options analyzed in part a. Compare this balance sheet with the firm’s current balance sheet. Round your answers to the nearest dollar.   Assets $ 110   Debt   $           Equity   $     What course of action should the firm take? Round your answer to the nearest whole number. Since the firm is currently using   % debt financing, it  at its optimal capital structure and  As a…

What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. X Answer is complete but not entirely correct. Weighted-average cost of capital 11.6 × % 1 million $ 23 7.68% $14 million 9% 7% 0.75 5.8% 40%

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An accountant for Stability Inc. must calculate the weighted average cost of capital of the corporation using the following information.     Interest Rate Accounts payable $35,000,000 0 Long-term debt 10,000,000 8% Common stock 10,000,000 15% Retained earnings 5,000,000 18%   What is the weighted average cost of capital of Stability? Select one: a. 10.25% b. 6.88% c. 12.80% d. 8.00%

What is the weighted-average cost of capital for SKYE Corporation given the following information? 1 million Equity shares outstanding. Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % $ 20 7.68% $11 million 98 3% 0.75 5.5% 45%

Domestic

Blazingame Inc.'s capital components have the following market values. Debt$34,030,000Preferred Stock16,500,000Common equity47,860,000 Calculate the firm's capital structure and show the weights that would be used for a weighted average cost of capital (WACC) computation. Round the values to the nearest dollar and the weights to three decimal places of percentage. Debt$  fill in the blank 1   Values Weights Debt $ _____   Preferred Stock   ____ _____   Common Equity ____ _____   $ _____ _____

if A firm's current balance sheet is as follows: Assets                      $100                   Debt                                $10                                                           Equity                                $90 a. what is the firm's weighted-average cost of capital at various combinations of debt and equity, given the following information?  Debt/assets      after-tax cost of Debt     cost of equity    cost of capital 0%                                       8%                        12%                      ? 10                                         8                           12                        ? 20                                         8                          12                         ? 30                                         8                          13                         ? 40                                         9                          14                         ?  50                                        10…

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Please calculate investment in net working capital, net cash flows, and present value of net cash flows! Thank you!

Question: Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3x Return on assets (ROA) 7% Return on equity (ROE) 14% a. Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. b.Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital.

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What is the return on capital employed of this financial accounting question?