In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Enter your answer in dollars. For example, $1.2 million should be entered as $1200000. Round your answer to the nearest dollar. Do not round intermediate calculations. $ fill in the blank 2 Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, what is its WACC? Round your answer to two decimal places. Do not round intermediate calculations. fill in the blank 3 % Suppose now that there is not enough internal cash flow and the firm must issue new shares of stock. Qualitatively speaking, what will happen to the WACC? I. rs and the WACC will decrease due to the flotation costs of new equity. II. rs will increase and the WACC will decrease due to the flotation costs of new equity. III. rs will decrease and the WACC will increase due to the flotation costs of new equity. IV. rs and the WACC will not be affected by flotation costs of new equity. V. rs and the WACC will increase due to the flotation costs of new equity.
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
Excel Online Structured Activity: WACC Estimation
On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $25 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt.
| Debt | $30,000,000 |
| Common equity | 30,000,000 |
| Total capital | $60,000,000 |
New bonds will have an 6% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required
The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
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In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Enter your answer in dollars. For example, $1.2 million should be entered as $1200000. Round your answer to the nearest dollar. Do not round intermediate calculations.
$ fill in the blank 2
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Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, what is its WACC? Round your answer to two decimal places. Do not round intermediate calculations.
fill in the blank 3 %
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Suppose now that there is not enough internal cash flow and the firm must issue new shares of stock. Qualitatively speaking, what will happen to the WACC?
I. rs and the WACC will decrease due to the flotation
costs of new equity.
II. rs will increase and the WACC will decrease due to the flotation costs of new equity.
III. rs will decrease and the WACC will increase due to the flotation costs of new equity.
IV. rs and the WACC will not be affected by flotation costs of new equity.
V. rs and the WACC will increase due to the flotation costs of new equity.
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