Purchase Solution

WACC

Not what you're looking for?

Ask Custom Question

Reactive Industries has the following capital structure. Its corporate tax rate is 35%. What is its WACC?

Security Market Value Required Rate of Return
Debt $20 million 6%
Preferred stock $10 million 8%
Common stock $50 million 12%

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in text file.

Solution Preview

Reactive Industries has the following capital structure. Its corporate tax rate is 35%. What is its WACC?

Security Market Value Required Rate of Return
Debt $20 million 6%
Preferred stock $10 ...

Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Multiple choice

    The project's IRR increasess as the WACC declines. The project's NPV increases as the WACC declines.

  • MCQ on capital budgeting

    MIRR is calculated by investing the intermediate cash flows at project's WACC. Therefore, MIRR is affected by WACC. Payback period does not use any discount rate; hence WACC has no role to play in the calculation of WACC.

  • WACC Explanation and analysis

    433532 WACC Explanation and analysis See attached file. Provided to you are 2 rounds of separate WACC analysis. Please provide an explanation of the WACC results and compare the rounds to each other. Are the WACC results a positive outcome?

  • What is meant by Weighted Average Cost of Capital (WACC)?

    209965 Weighted Average Cost of Capital (WACC) Definition a. What is meant by Weighted Average Cost of Capital (WACC)? b. What are the components of WACC? c. Why is WACC a more appropriate discount rate when doing capital budgeting? d.

  • Last month, Lloyd's Systems analyzed the project whose cash

    A financial calculator would be the simplest: NPV = CF0+CF1/(1+WACC)^1+CF2/(1+WACC)^2+CF3/(1+WACC)^3 Old WACC = 10%, NPV = -1000+410/(1+10%)^1+410/(1+10%)^2+410/(1+10%)^3 = $19.61 WACC = 11.25% New NPV = -1000+410/(1+11.25%)^1+410/(1+11.25%

  • Weighted Average Cost of Capital

    Situation 1 - Equity 50%, Preferred Stock 25% & Debt 25% WACC = 50%*14 + 25%*6 + 25%*8*(1-0.35) WACC = 7% + 1.5% + 1.3% WACC = 9.8% Situation 2 - Equity 60%, Preferred Stock 20% & Debt 20% WACC = 60%*14 + 20%*6 + 20%*8*(1-0.35) WACC = 8.4%

  • WACC

    129892 WACC The general rule for using the weighted average cost of capital in capital budgeting decisions is accept all projects with rates of return greater or equal to the WACC, less than the WACC, equal to or less than the WACC or positive rates of

  • cost of common stock that you would use in the WACC formula

    WACC Formula Describe how you would calculate the cost of common stock that you would use in the WACC formula? How are the weights derived that are used in the WACC formula?

  • WACC from the asset structure for McCabe Interests

    WACC = 14.25% The solution estimates WACC from the asset structure for McCabe Interests.

  • Weighted Average Cost of Capital (WACC)

    WACC = 10.60% The solution computes wacc with the given information.

View More Related Solutions