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Weighted Average Cost of Capital (WACC)

Weighted Average Cost for Equivalent Unit

Ink Co. had beginning work-in-process inventory of $372,480 in Oct. 1. Of this amount $152,460 was the cost of direct materials and $220,020 was the cost of conversion. The 48,000 units in the beginning inventory were 30% complete with respect to both direct materials and conversion costs. During Oct., 102,000 units were trans

Replacement analysis

The balboa bottling company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $600,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to

Finance questions: WACC and Capital Budgeting.

Please show work preferably all on excel A1. (Calculating the WACC) The required return on debt is 8%, the required return on equity is 14%, and the marginal tax rate is 40%. If the firm is financed 70% equity and 30% debt, what is the weighted average cost of capital? A2. (Calculating the WACC) The following values appl

Weighted Average Cost of Capital Under Different Situations

Question 1 Mr. Fredwick's capital structure is 25% debt, 25% preferred stock and 50% common stock (current market values). His capital structure is 20% debt, 20% preferred stock and 60% common stock (current book values). The rate of return of each component of the capital structure is 10% on debt, 12% on preferred stock and 18

Weighted Average Cost of Capital (WACC),.

Given the following information on T & T, Inc. capital structure, compute the companyâ??s weighted average cost of capital. The company's marginal tax rate is 40%. Type of Percent of Before-Tax Capital Capital Structure Component Cost Bonds 40% 7.5% Pref

Computation of Equivalent Units: Weighted Average Method

Percent Completed Units Materials Conversion Work in process, October 1 46,000 85% 55% Work in process, October 31 31,000 69% 53% The department started 397,000 units into production during the month and transferred 412,000 comp

Google: after tax wacc

Please provide answer/method if options don't match solution Assume that investors hold Google stock in retirement accounts that are free from personal taxes. Also assume that Google's current pre-tax WACC is 12%. If Google were to issue sufficient debt to give them a debt to value ratio of 0.5, then the Google's after-tax WACC

Company's WACC If All Equity Used is From Retained Earnings

Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55%

Computing WACC, Cost of Debt, Cost of Capital, DCF, and CAPM

6. You were hired as a consultant to Locke Company, and you were provided with the following data: Target capital structure: 40% debt, 10% preferred, and 50% common equity. The interest rate on new debt is 7.5%, the yield on the preferred is 7.0%, the cost of retained earnings is 11.50%, and the tax rate is 40%. The firm wil

What discount rate should you use to evaluate the equipment purchase?

As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate of use when evaluating the purchase of new packaging equipment for the plant. You have determined the market value of the firm's capital structure as follows: SOURCE OF CAPITAL MARKET VALUES Bo

Sales margin, capital turnover, ROI, residential income

Company has the following data available: Sales $900,000 Contribution margin 470,000 Operating Income 90,000 Average Operating Assets 750,000 Weighted avg cost of capital 14% Imputed interest is 24% Tax rate is 18% What is: a) sales margin b) capital turnover c) ROI d) res

Finance Question- Calculating WACC, having trouble with flotation cost

WACC, equity from new stock, uses DCF 10. Assume that you are on the financial staff of Christopher Inc., and you have collected the following data: (1) The yield on the companyâ??s outstanding bonds is 7.0%, and its tax rate is 40%. (2) The expected year-end dividend is $0.80 a share, the dividend is expected to grow at a c

Calculating Weighted Average Cost: Ryan Enterprises

Ryan Enterprises forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. What is the Year 0 value of operations, in millions? Year 1 2 3 FCF -$15.0 $10.0 $40.0

Equivalent Units - Weighted-Average Method

Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below: Percent completed tons of

WACC and Expected cost of new equity

The CEO of the company below would like to know the companyâ??s current weighted average cost of capital and the expected cost of new equity if the company were to issue new shares. I need you to see the steps to calculate this and list any assumptions. I have been provide the information below: ----------------------------

Capital Budgeting question for Corporate Finance Class

A U.S. firm, Vanger Inc., is considering expansion of its British subsidiary Albion plc. The cost of the expansion is 60 million British pounds, which must be expanded in the very near future (we will assume at t=0). This capital expenditure will be depreciated straight line for five years. Revenue in the first year (aggregat

WACC, Capital budgeting, stock pricing

1.) Explain how a change in interest rates in the economy would be expected to affect each component of the weighted average cost of capital? 2.) If you were analyzing a replacement project and suddenly learned that the old equipment could be sold for $1,000 rather than $400, would this new information make the replacement look

WACC, IRR and NPV

Many firms use the weighted average cost of capital for the firm as the hurdle rate when comparing to IRR or as the discount rate in an NPV calculation. However, there is an implicit assumption being made when one does that. What problems can one encounter or what errors may occur if one uses the WACC for evaluating all projec

Accept/Reject Decision Under the IRR Method

An increase in the firm's WACC will decrease projects' NPVs, which could change the accept/reject decision for any potential project. However, such a change would have no impact on projects' IRRs. Therefore, the accept/reject decision under the IRR method is independent of the cost of capital.

Finance

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of common using retained earnings is 12.75%. The firm will not be issuing any new stock. What is its WACC? 8.9

Finance

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of common using retained earnings is 12.75%. The firm will not be issuing any new stock. What is its WACC?

Inventory Valuation All Three Methods

The following are data available for Richards Co. for the month of May: Sales 1,120 units Beginning Inventory 200 units @ $1.25 Purchases, in chronological order 500 units @ $1.30 400 units @ $1.40 700 units @

What's the weighted average cost of capital (WACC)

The all equity cost of capital for a company is 15%, and the company has set a target debt to value ratio of 50%. The current cost of debt for a firm of this risk is 10% and the corporate tax rate is 34%. What's the weighted average cost of capital (WACC) for the company? Please show all workings.