Currently, Mayers Manufacturing Enterprises (MME) has a capital structure consisting of 35% debt and 65% equity. MME's debt currently has a p 6.6% yield to maturity. The risk-free rate is 4.6% and the market risk premium is 5,6%.\' Using CAPM, MME estimates that its cost of equity is currently 12.6%. The company has a 40%. 12 your answer to tax rate a) What is MME's current WACC? Rand two decimal places Vo do As
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
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Currently, Meyers Manufacturing Enterprises (MME)
Ihas a capital structure, consisting of 35% debt
and 65% equity. MME's debt cuwerth has a
6.6% yield to maturity. The risk-free rate.
is 4.6% and the market risk premium is 5.6% W
Using CAPM, MME estimates that its cost of
equity is currently 12.6%. The company has a 40%.
12
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tux rute
a) What is MME's current WACC? Rand
two decimal places
LEM
your answer to
to?
3) What is the current beta on MME's common stock?
Round your answer to four decimal places
"
10
() What would MIME's beta be if the company had no
debt in its capital structure? Rand your answer to four
decimal places
IdMME's financial staff is considering changing its capital
structure to 45% debt and 55% equity. If the company
I went ahead with the proposed change, the yield to
maturity on the company's boods would use to 7.1%. The
proposed change will have no effect on the company's tax
rate
What would be the company's new cost of equity if it
adopted the proposed change in capital structure ?
Round your criswer to two decimal places.
%
e what would be the company's new WAre if it adopted
the purposed change in capital structure?
93
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