BBB Inc.'s target capital structure is 20% debt, 15% preferred, and 65% common equity. The interest rate on new debt is 5.50%, the yield on the prefered a 6.9%, the cost of tained in 1.2%,rate is 40%. The firm will not be issuing any new stock What is the WACC? Do not round your intermediate calculationsO a.6.35%Ob.5.56%Oc642%Od. 7.88%Oe4.77%

The weighted average cost of capital(WACC) is calculated using following equationWhere, wd, wp and…

BBB Inc.'s target capital structure is 20% debt, 15% preferred, and 69% common equity. The interest rate on new debt is 5.5%, the yield on the prefered 6.9%, the stafined 2 rate is 40%. The firm will not be issuing any new stock What is the WACC? Do not round your intermediate calculations 0a639% Ob.5.56% D Od.7.88% Oe477%

BBB Inc.'s target capital structure is 20% debt, 15% preferred, and 69% common equity. The interest rate on new debt is 5.5%, the yield on the prefered 6.9%, the stafined 2 rate is 40%. The firm will not be issuing any new stock What is the WACC? Do not round your intermediate calculations 0a639% Ob.5.56% D Od.7.88% Oe477%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Railsplitters, Inc. has the following information for its capital structure: Instrument: Amount Issued Current Price YTM Bond A $500 Million 100.82 4.36% Bond B $350 Million 101.36 4.49% Common Stock 42.5 Million Shares $28.21 per share E(R ) Market = 8.65% β = 1.27 Expected Dividend = $1.95 Rf = 2.10% Growth Rate = 2.75% Given this information, if the tax rate of the firm is 30%, what is the after-tax cost of debt?
FIXY has assets of $2 million invested in a 25-year, 6 percent annual coupon Treasury bond selling at par. The assets are financed with equity and a $ 1700000, 4-year, 3 percent annual coupon capital note selling at par. What is the leverage adjusted duration gap of FIXY? What is the impact on equity value if the relative change in all market interest rates is AR/(1+R /2)=0.003?
29. Mackenzie Company has a price of $36 and will issue a dividend of $2.00 next year. It has a beta of1.2, the risk-free rate is 5.5%, and the market risk premium is estimated to be 5.0%. a. Estimate the equity cost of capital for Mackenzie. What ___% b. Under the CDGM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? What __% **round to two decimal places**
Determine Garneau's optimal capital structure based on the following information: Debt EPS DPS Stock Price 20% 2.2 1.1 40.12 30% 2.4 40% 2.6 50% 2.8 Equity 80% 70% 60% 50% O a. 20% debt; 80% equity O b. 40% debt; 60% equity O c. 50% debt; 50% equity O d. 30% debt; 70% equity 1.2 1.3 1.4 41.34 40.52 39.42
which option is correct
Answer the following questions given the information below: Equity Information 40 million shares $100 per share Beta = 1.15 Market risk premium = 8% Risk-free rate = 3% Debt Information $1 billion in outstanding debt (face value) YTM = 9% What is the cost of equity? What is the cost of debt? What is the after-tax cost of debt? What are the capital structure weights? What is the WACC?
Here is some information about Stokenchurch Incorporated: Beta of common stock = 2.0 Treasury bill rate=4% Market risk premium = 8.3% Yield to maturity on long-term debt = 6% Book value of equity = $520 million Market value of equity = $1,040 million Long-term debt outstanding = $1,040 million. Corporate tax rate = 21% What is the company's WACC? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. WACC %

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