Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected to generate free cash flows of $1.5 million per year, growing at a rate of 2.5% per year. Goodyear has an equity cost of capital of 8.5%, a debt cost of capital of 7%, a marginal corporate tax rate of 35%, and a debt-equity ratio of 2.6. If the plant has average risk and Goodyear plans to maintain a constant debt-equity ratio, what after-tax amount must it receive for the plant for the divestiture to be profitable?
5.

Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.1% and its marginal tax rate is 35%.

a. What is Alcatel-Lucent's WACC?
b. If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the following expected free cash flows?

Year

0

1

2

3

FCF

−100

50

100

70
c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part b?

Is it important to know your company's WACC? Why or why not? How might management decisions impact the WACC? To what extent is your company's WACC uncontrollable?

Determine theweightedaveragecost of capital (WACC) for the XYZ Company that will finance its optimal capital budget with $120 million of long-term debt (kd = 12.5%) and 180 million in retained earnings (ke = 16%). XYZ present capital is considered optimal. The marginal tax rate is 40%.

Calculate WeightedAverageCost of Capital (WACC) for Alcoa, Inc. Please show all work.
Here is the end of year reports for 2009
http://www.alcoa.com/global/en/investment/pdfs/2009_Annual_Report.pdf

#1 Determine theweightedaveragecost of capital for a firm given the follow info below:
Equity : $200,000 shares;stock price of $73
Beta of 1.54; risk free rate of 4%; risk premium of 6%
Debt info: Book value of $3 million; interest expense of $278,000; average maturity of 13 years; Pre-tax cost of debt of 6.5%; tax rat

I need help in calcuating for Weightedaveragecost of capital.
The question go Suppose that George Industries has a cost of equity of 14%, no preferred stock and a cost of debt of 9%. If the target debt/equity ratio is 75% and the tax rate is 34%, what is Dugan 's weightedaveragecost of capital(WAAC)?

GII capital structure is 75% equity based and 25% debt based. GII is in the 25% marginal tax bracket in France and has a cost of equity of 18% and an average debt cost of 7%. Calculate GII weightedaveragecost of capital (WACC).

Global Technology's capital structure is as follows:
Debt
35%
Preferred stock
15%
Common equity
50%
The after-tax cost of debt is 6.5 percent; thecost of preferred stock is 10 percent; and thecost of common equity (in the form of retained earnings) is 13.5 percent.
Calculate Global Technology's weighted aver

United Business Forms' capital structure is as follows:
Debt-35%
Preferred stock-15%
Common equity-50
The aftertax cost of debt is 7 percent, thecost of preferred stock is 10 percent, and thecost of common equity (in the form of retained earnings) is 13 percent.
Calculate United Business Forms' weightedaveragecost