General Lithograph Corporation uses no preferred stock. The firm's capital structure uses 34% debt (hint: the rest is equity). The marginal tax rate is 28.73% and the before-tax cost of debt is 3.68%. The firm expects to pay a dividend per share of $0.96 next year, and their dividend is expected to grow at 5.38% over the long-run. Their stock currently trades at $16.66 per share. What is General Lithograph's weighted average cost of capital (WACC)? Enter your answer without the "%", and with two decimal places (in other words, if you calculate 9.87%, then just enter 9.87). 8.25 margin of error +/- 0.05
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- Dixon Corp has announced a per-share dividend of $5.25 for the year just ended. The company’s earnings and dividends per share are expected to grow at a steady rate of 4.50% for the foreseeable future. Each share of the company’s common stock is currently trading for $94. Estimate Dixon’s marginal cost of common equity. Dixon faces a marginal tax rate of 30%. 5.84% 10.34% 7.24% 13.54% 9.79%Badidap Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital of 9%. The firm is growing at a constant rate and does not issue any preferred shares. The after-tax cost of debt is determined at 9%. The expected dividend to be declared by Badidap Co. is P2 and growth rate is 1%. How much is the current price of the ordinary share?Pearson Motors has a target capital structure of35%debt and65%common equity. with no preferred stock. The yield to maturity on the company's outstanding bonds is 894, and its tax rate is 25\%. Pearton's CFO estimates that the company's WACC is 11 .505\%. What is Pearson's' cost of common equity? Do not round intermediate calculatione. Plound your answer to two decimal places.
- S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a constant rate of 4.50% a year, and the common stock currently sells for $35 a share. The befoes-tax cost of debt in S and the tax rate is 40%. The target capital structure consists of 60% debt and 40% common equity. What is the company's WACC? Do not round your intermediate calculations. Ⓒa. 8.39% b.9.24 % O c. 6.25 % Od. 6.69% Ⓒ.7.97%Mama Inc. utilizes the residual dividend model to determine its ordinary dividend payout. This year the company expects its net income to be P2,000,000, and it expects to retain 75% of the income. The company’s target ordinary equity ratio is 40%, and the firm is financed with only ordinary equity and debt. 1. How much is the addition to retained earnings? 2. What is the plow back ratio? 3. What is the company’s forecasted total capital budget for the year?Haulsee Inc. pays no dividend currently but is expected to start paying a small dividend next year. The 5-year-old firm has a beta of 1.25 and current earnings of $0.90 per share. The current Treasury bill rate is 6.10%, and the market risk premium is 8.8%. Determine Haulsee's cost of equity if the firm's tax rate is 40%.
- The common stock of Buildwell Conservation & Construction Incorporated (BCCI) has a beta of 0.9. The Treasury bill rate is 4%, and the market risk premium is estimated at 8%. BCCI's capital structure is 22% debt, paying an interest rate of 5%, and 78% equity. The debt sells at par. Buildwell pays tax at 21%. a. What is BCCI's cost of equity capital? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is its WACC? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. If BCCI is presented with a normal project with an internal rate of return of 12%, should it accept the project if it has the same level of risk as the current firm? a. Cost of equity capital b. WACC c. Accept the project Yes %Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…
- Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 12.70%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. ? %The common stock of Buildwell Conservation & Construction Incorporated (BCCI) has a beta of 0.9. The Treasury bill rate is 4%, and the market risk premium is estimated at 8%. BCCI’s capital structure is 30% debt, paying an interest rate of 5%, and 70% equity. The debt sells at par. Buildwell pays tax at 21%. What is BCCI’s cost of equity capital? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place. What is its WACC? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. If BCCI is presented with a normal project with an internal rate of return of 12%, should it accept the project if it has the same level of risk as the current firm?Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at 11% and its common stock currently pays a P2 dividend per share. The stock's price is currently P24.75 and its dividend is expected to grow at a rate of 7% per year. Its tax rate is 35% and its WACC is 13.95%. What percentage of the company's capital structure consists of debt?