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    Weighted Average Cost of Capital (WACC)

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    1. You were hired as a consultant to Keys Company, and you were provided with the following data: Target capital structure: 40% debt, 10% preferred, and 50% common equity. The after-tax cost of debt is 4.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is the firm's WACC?

    1. You were hired as a consultant to Keys Company, and you were provided with the following data: Target capital structure: 40% debt, 10% preferred, and 50% common equity. The after-tax cost of debt is 4.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new sto

    Weighted Average Method: Durall Company, manufacturer of plastic gaskets

    Weighted Average Method Durall Company manufactures a plastic gasket that is used in automobile engines. The gaskets go through three processing departments: mixing, forming, and stamping. The company's accountant (who is very inexperienced) has prepared a summary of production and costs for the forming department as follows

    WACC

    Bolero has compiled the following information on its financing costs: Type of Financing Book Value Market Value Cost Long-term debt $5,000,000 $2,000,000 10% Short-term debt $5,000,000 $5,000,000 8% Common Stock $10,000,000 $13,000,000 15% Total $20,000,000 $20,000,000

    Important Information About Value of Operations

    Brooks Enterprises has never paid a dividend. Free cash is projected to be $80,000 and $100,000 for the next 2 years respectively, and after the second year it is expected to grow at a constant rate of 8%. The company's weighted average cost of capital is WACC=12% a) What is the terminal or horizon value of operations? b)

    Marginal cost of capital (WACC) above and below the break points in the MCC: A company has been growing at a constant rate of 8% a year. Its retained earnings for the year are $16 million, common stock is selling for $60, and the current debt to assets ratio is 35%. The company can raise up to $18 million in debt at 8%. A 12% interest will apply if the amount exceeds $18 million. New common stock yields the firm $45. The required rate of return on retained earnings is 12%.The tax rate is 40%. Calculate the marginal cost of capital (WACC) above and below the break points in the MCC schedule.

    A company has been growing at a constant rate of 8% a year. Its retained earnings for the year are $16 million, common stock is selling for $60, and the current debt to assets ratio is 35%. The company can raise up to $18 million in debt at 8%. A 12% interest will apply if the amount exceeds $18 million. New common stock yields

    Affect to a firm's cost of debt, cost of equity, and WACC

    Please see attached file. How would each of the following affect a firm's cost of debt, rd(1-T); its cost of equity, rs; and its weighted average cost of capital, WACC? Indicate by a plus (+), a minus (-), or a zero (0) if the factor would raise, lower, or have an indeterminate effect on the item in question. Assume other t

    Analysis of Work in Process Account - Weighted Average Method for Dillion Corp

    Analysis of Work in Process Account - Weighted Average Method Dillion Corporation manufactures an industrial cleaning compound that goes through three processing departments-Grinding, mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-Account for a rece

    Cost of Capital Spreadsheet: a. What is the current Kd, Kp and Ke assuming no new debt or stock? And what is the current cost of capital? b. At what size capital structure will the firm run out of retained earnings? c. At that point what will the Kne (cost of new common equity) be? And what will the cost of capital be? d. At what size of capital structure will the firm's cost of debt change? e. At that point what will the new Knd (after tax cost of debt) be? And what will the cost of capital be? f. Given the above summarized the amounts of financing levels and costs of captial for each level. g. Rank the projects from highest returns to lowest. h. Explain what projects are accepted and why and which are rejected and why? i. Given your answer to h, what then would be the new FMV's of debt and equities?

    Rolling Stone Manufacturing is going to introduce a new product line and to accomplish this it has four projects analyzed in which it wants to invest a total of $100 million. Your job is to find what it will cost to raise this amount of capital and based on the cost of capital determine which of the projects should be accepted

    WACC and Project NPV

    Midwest Water Works estimates that its WACC is 10.5 percent. The company is considering the following capital budgeting projects: Project Size Rate of Return A 1 million 12.0% B 2 million 11.5% C 2

    Evaluating an Annual Report: Proctor & Gamble WACC, ratios, industry averages

    Chosen Company: Proctor & Gamble Review Appendix A for details to include in your analysis of your chosen company's financial health. ? Prepare a word paper that includes performance ratios based on the company's last two annual reports and data available on the company's Web site. Compute the eight ratios listed belo

    Drying and Packaging Dept: Transferred-in costs, weighted-average, FIFO methods

    Transferred-in costs, weighted-average and FIFO methods. Frito-Lay, Inc., manufactures convenience foods, including potato chips, and corn chips. Production of corn chips occurs in four departments: cleaning, mixing, cooking, and drying and packaging. Consider the Drying and Packaging Department, where direct materials (packa

    Calculate WACC; Construct a Pro Forma Balance Sheet

    A firm's current balance sheet is as follows: Assets $100 Debt $10 Equity $90 a. What is the firm's weighted-average cost of capital at various combinations of debt and equity, given the following information? Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0% 8% 12% 10 8 12 2

    Dartex Industries: Calculate WACC at a Marginal Tax Rate of 34%

    GP4 The capital structure of Dartex Industries and the pretax cost of capital for each component are shown in the table below. Calculate Dartex's weighted average cost of capital given that their marginal tax rate is 34 percent. Dartex Industries (in $000s) Component --------Value-----Cost of Capital Bonds----------

    Retained earnings, cash flows, WC, EVA, MVA,WACC

    Cumberland Industries most recent balance sheets in thousands of dollars are shown below and in partial model in file a. The company's sales for 2005 were $455,150,000 and EBITDA was 15% of sales. Furthermore depreciation amounted to 11% of net fixed assets, interest charges were $8,575,000, the state plus federal corporate

    Rolodex, Inc: Weighted Average Cost of Capital (WACC)

    Rolodex, Inc. would like to estimate its average cost of capital for the coming year. The capital budgeting plans call for funds totaling $200 million for the coming year. These funds will be raised from long-term debt, preferred stock, and common equity in the same proportions as their book values in the firm's balance sheet sh

    Ewing Distribution: Cost of Bond debt vs Preferred stock

    The Ewing Distribution Company is planning a $100 million expansion of its chain of discount service stations to several neighboring states. This expansion will be financed, in part, with debt issued with a coupon interest rate of 6.8 percent. The bonds have a 10-year maturity and a $1,000 face value, and they will be sold to

    Pullman Manufacturing: After-tax Cost of Capital calculations

    - Calculate the after-tax cost of a $25 million debt issue that Pullman Manufacturing Corporation (40 percent marginal tax rate) is planning to place privately with a large insurance company. This long-term issue will yield 6.6 percent to the insurance company.

    Calculate Equivalent Units using FIFO and Weighted-Average

    On March 1, a Company had 20,000 units of WIP in Department A, which were 100% complete as to material costs and 30% complete as to conversion costs. During March, 150,000 units were started in Department A and 160,000 units were completed and transferred to Department B. WIP on March 31 was 100% complete as to material costs an

    WACC

    With the following information compute the WACC: Corporate tax rate 40%, before tax cost of debt - 12%, preferred stock price - $32, common stock price - $21, dividend growth rate - 4.7%, preferred stock yearly dividend - $5.00, common stock yearly dividend - $2.50, preferred stock flotation cost per share $6.00.

    Finance

    Problem 12: Given the following data: Percent of capital structure: Debt 40% Preferred stock 10 Common equity 50 Additional information: Bond coupon rate 12% Bond yield to maturity 13% Dividend, expected common $4.00 Dividend, preferred $12.00 Price, common $60.00 P

    Cost of Capital

    Please see the file attached. Garner Data Systems - Comprehensive Problem

    Calculate WACC for Boonville and Western Transportation Co

    The Boonville and Western Transportation Co. has the following capital structure.  Stock $50 mil with a P/E of 8  Bonds $20 million at 8 % The company has a tax rate of 35% What is the weighted average cost of Capital (WACC) If the Boonville and Western Transportation Co had Bonds of $50 million a

    Weighted Average of Cost of Capital

    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?

    WACC

    American Widget company has total capital, consisting of long-term debt and common equity, of $120 million. Fifty million of total capital is in the form of long-term debt, which carries a cost of 10 percent. The company's equity carries a cost of 16 percent. If the company's tax rate is 35 percent, what is the WACC?

    In what sense is the WACC an average cost?

    Question 1: In what sense is the WACC an average cost? A marginal cost? Question 2: A company's 6% coupon rate, semiannual payment, $100 par value bond that matures in 30 years sells at a price of $515.16. The company's federal-plus-state tax rate is 40%. What is the firm's component cost of debt for purposes of calculati

    Coca Cola Co.

    All the questions are about Coca Cola Co. answer all questions about information that you find in the internet website. The company that choose is Coca Cola Co. 1-Select a publicly traded company and obtain their financial statements, from these financial statements determine how the company is financed. What is the mix of the

    WACC

    Given the following information for Bellevue Power Co., find the WACC. Assume the company's tax rate is 31%. DEBT: 4,800 8% coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103% of par, the bonds make semiannual payments. COMMON STOCK: 94,500 shares outstanding, selling for $62 per share; t

    COST OF CAPITAL - WACC

    Rose Corp., a privately-owned company, is going public soon. After the IPO, the company expects its total assets to be $50 million. It plans to raise $25 million by selling 12%, 20-year bonds at par. Rose also anticipates selling $5 million of preferred stock, with each share ($100 par value) receiving an annual dividend of $