How to find ths using a Financial calculator!! Suppose that Glamour Nails, Inc.'s capital structure features 40percent equity, 60 percent debt, and that its before-tax cost of debt is 5 percent, while its cost of equity is12 percent. If the appropriate weighted average tax rate is 40 percent, what will be Glamour Nails' WACC?4.78 percent 4.85 percent 6.60 percent 7.00 percent

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Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 10EP

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Check my we Suppose that T-shirts, Incorporated's capital structure features 25 percent equity, 75 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 12 percent. If the appropriate weighted average tax rate is 21 percent, what will be T-shirts' WACC? Multiple Choice 7.74 percent 4.75 percent 7.20 percent 9.00 percent
Suppose the weighted average cost of capital of the Oriole Company is 10 percent. If Oriole has a capital structure that is 50 percent debt and 50 percent equity, its before-tax cost of debt is 7 percent, and its marginal tax rate is 20 percent, then its cost of equity capital is closest to: a. 10.40 percent. b. 12.40 percent. c. 8.40 percent. d. 14.40 percent.
Suppose that TapDance, Inc.’s capital structure features 70 percent equity, 30 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 14 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance’s WACC? (Round your answer to 2 decimal places.)
Harmony Sego has a tax rate of 21%, the interest rate on debt is 10%, and the WACC is 15%. If the debt ratio is 60% (i.e., the weight on debt), what is the expected rate of return to equity holders? O 12.50% O 22.50% O 25.65% O 21.25%
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For examples 1 and 2, assume the net cash flow is 2,000,000, the tax rate is 40% and the cost of common equity is 10% which is computed using the CAPM equation. Explain in a few sentences what each example means.
If the return on asset (ROA) is 10%, the pre-tax cost of debt is 8%, and the corporate tax rate is 20%. What will the return on equity (ROE) be if the capital structure is 60% equity and 40% debt? Group of answer choices 10% 13.6% 9% 12.4%
If the state tax rate is 20% and the federal tax rate is 30%, what is the total effective tax rate? a. 34% b. 50% c. 44% d. 37% 2. Holding all other variables constant, which of the following would increase return on equity? An increase in _____________. a. the tax rate b. the equity ratio (equity/total assets) c. total assets d. total asset turnover
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Suppose that MNINK Industries' capital structure features 63 percent equity, 7 percent preferred stock, and 30 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.60 percent, 9.50 percent, and 9 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 %

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