Upton Umbrellas has a cost of equity of 11.4 percent, the YTM on the company's bonds is 6 percent, and the tax rate is 35 percent. The company's bonds sell for 102.9 percent of par. The debt has a book value of $402,000 and total assets have a book value of $950,000. If the market-to-book ratio is 2.68 times, what is the company's WACC? Multiple Choice 9.75% 5.55% 9.36% 8.27% 8.17%

Upton Umbrellas has a cost of equity of 11.4 percent, the YTM on the company's bonds is 6 percent, and the tax rate is 35 percent. The company's bonds sell for 102.9 percent of par. The debt has a book value of $402,000 and total assets have a book value of $950,000. If the market-to-book ratio is 2.68 times, what is the company's WACC? Multiple Choice 9.75% 5.55% 9.36% 8.27% 8.17%

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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The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)
CCR Incorporated is considering a new project. The company has a debt-equity ratio of .62. The company’s cost of equity is 11.8%, and the after tax cost of debt is 4.9%. What is the WACC for CCR?
Paraglide Corp. has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its pretax cost of debt is 8.2 percent. If the tax rate is 34 percent, what is the company's WACC? 11.28 percent 11.72 percent 13.20 percent 12.84 percent 12.91 percent
Lannister Manufacturing has a target debt-equity ratio of .85. Its cost of equity is 10 percent, and its cost of debt is 7 percent. If the tax rate is 23 percent, what is the company's WACC? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC
Optimist Company can sell common shares at $30 per share and can obtain debt funding at 8 percent. It has a marginal income tax rate of 25 percent. The yield on US Treasury securities is 3 percent. The market risk premium is 6.0 percent, and the firm's beta is 0.9. It has a targeted debt-to-equity ratio of 1:1. What is its after-tax cost of debt? Maximum number of characters (including HTML tags added by text editor): 32,000 Show Rich-Text Editor (and character count)
Sixx AM Manufacturing has a target debt-equity ratio of 2.5. Its cost of equity is 0.11, and its pretax cost of debt is 0.04. If the tax rate is 0.31, what is the company's WACC? Enter the answer with 4 decimals (e.g. 0.0123)
Generous Corporation has a cost of equity of 10.8 percent, the YTM on the company's bonds is 6.3 percent, and the tax rate is 35 percent. The company's bonds sell for 103.6 percent of par. The debt has a book value of $420,000 and total assets have a book value of $956,000. If the market-to-book ratio of equity is 2.86 times, what is the company's WACC? 8.90% 780% 9.32% 792%
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CoffeeCarts has a cost of equity of 15.1%, has an effective cost of debt of 3.8%, and is financed 69% with equity and 31% with debt. What is this firm's WACC? CoffeeCarts's WACC is __ % ? (Round to one decimal place.)
ABC Inc. borrows money at 9%, sells bonds at 8%, and the purchasers of common stock require 13% rate of return. If the company has borrowed $40 million, sold $60 million in bonds, and sold $100 million worth of common stocks, what is the Weighted Average Cost of Capital (WACC)? If the same company from the previous question used 5% ROR for loans, 9% ROR for bonds, and 12% ROR for stocks, and also used a 50% tax rate, what is the WACC?
Ursala, Incorporated, has a target debt-equity ratio of 1.20. Its WACC is 8.7 percent, and the tax rate is 25 percent. a. If the company's cost of equity is 13 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If instead you know that the aftertax cost of debt is 5.8 percent, what is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of debt b. Cost of equity 6.31 % 13.39 %
The X corporation has unlivered cost of equity of 10%.the company wants to expands its operations by issuing new debt.if the cost of the debt of the company is 6% and the cororate tax is 30%.what is the debt equity ratio of the company if the target cost of equity is 12%.

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