Percy Motors has a target capital structure of 40 percent debt and 60 percent common equity, with no preferred stock. The yield to maturity on the company’s outstanding bonds is 9 percent, and its tax rate is 40 percent. Percy’s Chief Financial Officer estimates that the company’s WACC is 9.96 percent. What is Percy’s cost of common equity?

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A: Weight Debt=30% Common Equity = 70% Cost : Bond =9% Tax =40% WACC= 10.50%

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A: WACC = (Weight of common stock * Cost of common equity) + [Weight of debt * YTM(1 - Tax rate)]…

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A: Price per share= Debt amount / ( Shares of all equity firms - Shares after debt )

Q: 45

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A: Given Data:Unlevered cost of capital (ru​): 12.3%Total tax rate (T): 25%Earnings before interest and…

Q: overall cost of capital? :

A: Overall cost of capital = ( Percentage of debt * Cost of debt) + (Percentage of preferred stock *…

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A: The objective of the question is to calculate the pre-tax cost of debt for Hossain Health. The…

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A: We need to use Modigliani and Miller proposition II with taxes approach to calculate value of…

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A: Cost of Common Equity: It represents the cost of raising equity capital from the investors for the…

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A: WACC is the weighted average cost of capital of the company. It is the overall cost to be incurred…

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A: The rate of return that is expected by investors on their equity investment is term as the cost of…

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A: The objective of the question is to calculate the cost of common equity for Pearson Motors. The…

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A: Debt-value ratio = 0.75 WACC = 12% Cost of equity = 18% Tax rate = 40%

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A: Calculate the weighted average cost of capital as follows: Weighted average cost of capital=(Weight…

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A: Cost of equity is the percentage of interest expected by investors in the equity. Levered Equity is…

Q: The Nolan Corporation finds it is necessary to determine its marginal cost of capital. Nolan’s…

A: Here,Cost (After Tax)WeightsDebt 8.60%35%Preferred Stock8%25%Common Equity/ Retained…

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A: In this we have to calculate the cost of equity from WACC of company.

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A: Calculation of cost of capital of common equity