Explore BrainMass

Weighted Average Cost of Capital (WACC)

Golden Fleece Financial

You are given the following information for Golden Fleece Financial. Long-term debt outstanding: $300,000 Current yield to maturity (r debt ): 8% Number of shares of common stock: 10,000 Price per share: $50 Book value per

Weighted Average Cost of Capital (WACC) explained in this solution

ABC Co. is estimating its WACC. Its target capital is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semi-annully, a current maturity of 20 years, and sell for $1,000. The company could sell, at par, $100 preferred stock which pays a 12 percent annual dividend,

Which of the following measures an organization's liquidity?

1. Which of the following measures an organization's liquidity? a. acid test ratio b. debt ratio c.. return on equity d. times interest earned e. return on assets 2. Which of the following is a method by which securities are distributed to final investors? a. negotiated purpose b. commission or best effort basi


Pepsi Co. currently is 100% equity financed. The company is considering changing its capital structure. More specifically, Pepsis' CFO is considering a recapitalization plan in which the firm would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change th

Project's weighted average cost of capital and equity beta

1. A firm with a corporate wide debt/equity ratio of 1:2, an after tax cost of debt of 7 percent, and a cost of equity capital of 15 percent is interested in pursuing a foreign project. The debt capacity of the project is the same as for the company as a whole, but its systematic risk is such that the required return on equity i

Jack's Construction Co: Weighted Cost of Capital

Question: Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk pr

Bonds, WACC, and Corporate Value

See attached. Bonds 1. Using AT&T (NYSE: T), discuss and analyze the firm's outstanding bond issues. WACC 2. Using AT&T, collect the following information: a. Cost of debt, yield to maturity on bonds and the firm's tax rate. b. Cost of preferred stock, if any, computed using the divide

Weighted average cost of capital (WACC) for Global Technology

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; the cost of preferred stock is 10 percent; and the cost of common equity (in the form of retained earnings) is 13.5 percent. Calculate Global Technology's weighted average cost of

Time Value of money

1.Present Value and Discounting Discounting: How much is $1 that we receive in 2 years worth today (r=9%)?     2.How Long is the Wait? If we deposit $5000 today into an account paying 10%, how long do we have to wait for it to grow to $10,000?     2.What Rate is Enough? Assume the total cost of a college educatio

Breakeven analysis, Hamada equation

Please help me out with the following questions: 1- A company's fixed operating costs are $ 500,000, its variable costs are $ 3.00 per unit, and the products sales price is $ 4.00. What is the company's breakeven point; that is, at what unit sales volume would its income equal its costs? --- 2-Assuming that the firm use

Economic value added

The following information pertains to Dallas, Inc.: Total assets $8,500,000 After tax operating income 1,000,000 Current liabilities 800,000 If Dallas has a 10% weighted-average cost of capital, its economic value added would be:

Weighted Average Cost of Capital

I need help with this assignment I am really lost. With the following data, calculate the individual cost for each security and the overall WACC. Percent of capital structure: Debt 35% Preferred stock 10% Common equity 55% Additional Information Bond

Evaluating long-term financial instruments and stategies

Please assist me with at least 300 words to the following question. 1. Evaluate the long-term financial instruments and strategies that Google utilized in their corporate financial decision-making in 2007. Please attach any formulas or ratios in Excel. Thanks for the help.


Material is introduced at the beginning of the process in the Assembly Department. Conversion costs are applied uniformly throughout the process. As the process is completed, goods are immediately transferred to the finishing Department. Data for the Assembly Department for the month of July 2008 follow: Work in process, June

Farhat Wineries: Compute WACC

Farhat Wineries is a privately held (not publicly traded) firm with the following balance sheet: Farhat Wineries ($ in millions) Assets 100 Long-term debt 40 Equity 60 Total 100 Total 100 In addition, you obtain the following information: ? The debt consists of perpetual bonds (they pay interest forever, and never

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. What is the impact on WACC when an organization needs to raise long term capital?

Required rate of return

3. Given that the traction corporation has a 40% debt, 60% equity capital structure and its WACC is 9.96%, find the required rate of return on equity. It is mentioned that the cost of debt before tax equals 9%, the tax rate is 40%. (Points: 2) 11.06% 13% 14.89% 8% The informatio

Optimal vs. Leveraged Capital Structure Impact on WACC

A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market value proportions: Source of Capital Target Market Proportions After-Tax Cost Long-term debt 45% 5% Preferred

Midwest Chemicals: Calculate weighted average, Process Costing, equivalent units

Midwest Chemicals manufactures a product called Mid-Tek. Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The followin

Calculate and evaluate the WACC for General electric

Can you please describe how the weighted average cost of capital (WACC) is calculated for General Electric. Can you evaluate the effectiveness of this approach. Please be detailed. Also, if you can direct me to any websites or reference material on how General Electric calculates its WACC, that would be great.

Basic Finance by Herbert Mayo: WACC calculations

Individual Assignment Problem 3 Chapter 21 - Basic Finance by Herbert Mayo A. What is the firm's weighted-average cost of capital at various combinations of debt and equity, given the following information? B. Construct a pro forma balance sheet that indicates the firm's optimal capital structure. Compare this balance she