Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the following proportions: debt, 41%; preferred stock, 15%; and common stock, 44%. If the cost of debt is 7.5%, preferred stock costs 8.3%, and common stock costs 11.5%, what is Oxy's weighted average cost of capital (WACC)? Oxy's weighted average cost of capital (WACC) is%. (Round to two decimal places.)

Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the following proportions: debt, 41%; preferred stock, 15%; and common stock, 44%. If the cost of debt is 7.5%, preferred stock costs 8.3%, and common stock costs 11.5%, what is Oxy's weighted average cost of capital (WACC)? Oxy's weighted average cost of capital (WACC) is%. (Round to two decimal places.)

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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Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the follwoing proportions: debt, 43%; preferred stock, 11%; and common stock, 46%. If the cost of debt is 6.4%, preferred stock costs 9.5%, and common stock cost 11.7%, what is Oxy's weighted average cost of capital (WACC)?
A levered firm has a pretax cost of debt of 6.8 percent and an unlevered cost of capital of 14 percent. The tax rate is 21 percent and the cost of equity is 17.7 percent. What is the debt-to-equity ratio? O 0.65 0.47 0.41 O 0.52
The ABC Company has a cost of equity of 21.2 percent, a pre-tax cost of debt of 5.2 percent, and a tax rate of 30 percent. What is the firm's weighted average cost of capital if the proportion of debt is 65.6%?
Based on the following information, what is the firm's weighted average cost of capital of the operating assets, WACCO? Cost of debt, RD: 7% Cost of equity, Rs: 20% Total market value of debt, D: 500 Total market value of equity, S: 1,500 Number of common shares outstanding: 100 Total market value of non-operating assets, N: 200 Cost of non-operating assets, RN: 9% Corporate tax rate, T: 40% O .143009 b. 168751 a. c. .188232 d. .127767
SodaFizz has debt outstanding that has a market value of $3 million. The company’s stock has a book value of $2 million and a market value of $6 million. What are the weights in SodaFizz’s capital structure?
Dickson, Inc., has a debt-equity ratio of 2.3. The firm's weighted average cost of capital is 11 percent and its pretax cost of debt is 8 percent. The tax rate is 23 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What would the company's weighted average cost of capital be if the company's debt- equity ratio were .80 and 1.30? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of equity b. Unlevered cost of equity C. WACC if debt-equity ratio = 0.80 WACC if debt-equity ratio = 1.30 % % % % do do do do
Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the following proportions: debt, 40%; preferred stock, 11%; and common stock, 49%. If the cost of debt is 7.1%, preferred stock costs 9.2%, and common stock costs 10.2%, what is Oxy's weighted average cost of capital (WACC)? Oxy's weighted average cost of capital (WACC) is %. (Round to two decimal places.)
Gamma Inc. has a weighted average cost of capital of 18.60%. The firm’s cost of equity is 24.40%, and it’s cost of debt is 15%. The tax rate is 34%. What is Gamma’s debt-to-equity ratio?
Mullineaux Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity capital is 11 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The applicable tax rate is 35 percent. a) What is Mullineaux's Weighted Average Cost of Capital (WACC)? b) The company president has approached you about Mullineaux's capital structure. He wants to know why the company doesn't use more preferred stock financing because it costs less than debt. Is he correct? What would you tell the president? 10 11 Create your Original Solution Below - Be sure to show all calculations and clearly indicate answers.
Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the following proportions: debt, 49%; preferred stock, 10%; and common stock, 41%. If the cost of debt is 7.3%, preferred stock costs 7.6%, and common stock costs 10.9%, what is Oxy's weighted average cost of capital (WACC)? \ Oxy's weighted average cost of capital (WACC) is ___________%. (Round to two decimal places.)
Turnbull Co. has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 8.2%, and its cost of preferred stock is 9.3%. If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 12.4%. However, if it is necessary to raise new common equity, it will carry a cost of 14.2%. If its current tax rate is 25%, how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.) 0.92% 0.78% 1.01% 0.83% Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will raise the $570,000 in capital by issuing $230,000 of debt at a before-tax cost of 10.2%, $20,000 of preferred stock at a cost of 11.4%, and $320,000 of equity at…
Homemade Flying Machines has a capital structure of 33% debt, 10% preferred stock and 57% common stock. The pre-tax cost of debt is 4.8%, the cost of preferred stock is 8% and the cost of equity is 13%. The firm's marginal tax rate is 21%. What is the company's weighted average cost of capital?

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