Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%.Required Rateof ReturnSecurityMarket ValueDebt$ 30 million4%Preferred stock30 millionCommon stock40 million10What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)WACC%

After tax cost of debt = before tax cost of debt * (1-tax rate) = 4% * (1-0.21) =4% * 0.79 = 3.16%

Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%. Required Rate of Return Security Market Value $ 30 million 30 million Debt 48 Preferred stock Common stock 40 million 10 What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WACC %

Reactive Power Generation has the following capital structure. Its corporate tax rate is 21%. Required Rate of Return Security Market Value $ 30 million 30 million Debt 48 Preferred stock Common stock 40 million 10 What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WACC %

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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Suppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)
Assume Hayworth corp. has an operating leverage of 5.39 and a financial leverage of 1.53. How much would the EPS of Hayworth corp. increase if sales increased by 0.23? Instruction: Round to three decimal places
Please see image to solve for question.
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
Target Corporation (TGT) has $2.14 million in assets that are currently financed with 100% equity. TGT’s EBIT is $385,000, and its tax rate is 25%. If TGT changes its capital structure to include 50% debt, its return on equity will increase. Assume the interest rate on debt is free. (justify your answer with numerical calculation) True False
You are given the following information on Kaleb's Heavy Equipment: Profit margin Capital intensity Debt-equity ratio Net income Dividends 18 $70,000 $ 15,200 Sustainable growth rate A Calculate the sustainable growth rate. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Use the following information to answer this question. Total assets Total current liabilities Total expenses Total liabilities Total revenues Tax rate $150,000 105,000 70,000 110,000 80,000 40% After -tax cost of capital 12% Invested capital is defined as total assets less total liabilities. (round your answers te one decimal ) Capital turnover equal O A) 53.3% B) 2 OC) 6.7% D) 28.6%

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