Super Co. is currently keeping a constant debt-to-equity policy with a debt-to value ratio of 30%. The after-tax unlevered cashflow is 35,000,000 a year in perpetuity and the unlevered value of assets is 545,000,000. The cost of debt is 4.45% and the tax rate is 34%. What is the levered return on equity?
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Super Co. is currently keeping a constant debt-to-equity policy with a debt-to value ratio of 30%. The after-tax unlevered cashflow is 35,000,000 a year in perpetuity and the unlevered value of assets is 545,000,000. The cost of debt is 4.45% and the tax rate is 34%.
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- Super Co. is currently keeping a constant debt-to-equity policy with a debt-to value ratio of 30%. The after-tax unlevered cashflow is 35,000,000 a year in perpetuity and the unlevered value of assets is 545,000,000. The cost of debt is 4.45% and the tax rate is 34%. What is the levered return on equity? ans: rE=7.27% please write the stepsFINA's business risk (Ru) is 9% in the industry. The debt-to-equity ratio is 0.4. The cost of debt is 3%. The tax rate is 20%. What is the required return of equity (Re)?ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.6 percent annually. What is the company's pretax cost of debt? If the tax rate is 24 percent, what is the aftertax cost of debt? Pretax cost of debt: __________% Aftertax cost of debt: __________%
- Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $162,000 per year. The cost of equity is 11.7 percent and the tax rate is 39 percent. The firm can borrow perpetual debt at 6.4 percent. Currently, the firm is considering converting to a debt- equity ratio of .72. What is the firm's levered value?6. Company A maintains a debt equity ratio of 0.7, where debt is the net debt (i.e. debt minus cash). The market value of the firm's equity is $200 million, and the required returns on the firm's equity and debt are 12% and 7%. The firm's marginal tax rate is 35%. A. If the company's free cash flow next year is $7 million, and the free cash flow is expected to grow at a constant rate. What is the growth rate of the free cash flow that is consistent with the company's current value? B. What is the value of the tax shield?Your company’s assets have an unlevered value of 25,456,890 USD and the perpetual annual unlevered cash produced is 1,750,000 USD. The Company decides to go through with a recapitalization, after which the debt-to-equity ratio (which the company decides to keep constant) is equal to 2.5. What is the value of debt if the interest rate is 2.45% and the tax rate is 36%?
- Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $204,000 per year. The cost of equity is 14.5 percent and the tax rate is 39 percent. The firm can borrow perpetual debt at 5.6 percent. Currently, the firm is considering converting to a debt–equity ratio of 1.14. What is the firm's levered value?ICU Window, inc, is trying to determine its cost of debt. The firm has a debt issue outstanding with 8 years to maturity that is quoted at 106.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.4 percent annually. What is ICU's pretax cost of debt? If the tax rate is 23 percent, what is the aftertax cost of debt?A company is financed with equity of $4.5 million and a bank loan of $2.5 million with an interest rate of 8.6% per annum. The EBIT is $1.12 million. The applicable tax rate is 19%. Use the above information to calculate the following: a) change in the return on equity and the degree of financial leverage given a 15% increase in EBIT next year, b) change in the return on equity and the degree of financial leverage given a 5% decrease in EBIT in the following year (the year following the year in which EBIT grew by 15%).
- Suppose you are estimating the WACC for Columbus Inc. It has the following data from its balance sheet: total debt = $290 million; total equity=$60 million. It has 20 million shares outstanding, and its stock is trading at $32 per share. Your analysis shows that the company's current borrowing rate is 7%, and that the cost of equity is 13%. If the company marginal tax rate is 30%, what is its WACC?Benjamin Manufacturing has a target debt-equity ratio of .45. Its WACC is 11.2%, and its cost of debt is 9 percent. What is the cost of equity if the tax rate is 20%?Edwards Construction currently has debt outstanding with a market value of $98,000 and a cost of 10 percent. The company has EBIT of $9,800 that is expected to continue in perpetuity. Assume there are no taxes. a-1. What is the value of the company's equity? a-2. What is the debt-to-value ratio? b. What are the equity value and debt-to-value ratio if the company's growth rate is 4 percent? c. What are the equity value and debt-to-value ratio if the company's growth rate is 8 percent?