Purchase Solution

WACC for a firm in the 35% corporate tax bracket

Not what you're looking for?

Ask Custom Question

What is the weighted average cost of capital for a firm in the 35% corporate tax bracket, with the following:

Financing Amount Rate of Interest for each.

Equity $ 1,150,000 11.57%

Debt $ 780,000 6.40%

Preferred $ 325,000 9.35%

Please show all work.

Thank you,

Don

Purchase this Solution
Solution Summary

The solution explains how to calculate the weighted average cost of capital.

Solution Preview

The weighted average cost of capital is given as
proportion of debt X cost of debt + proportion of preferred stock X cost of preferred stock + proportion of equity X cost of ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Lean your Process

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

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Calculate Wiley's WACC.

    The pre-tax cost of debt (K d ) is 14 percent; the preferred stock value is (K ps ) 12.3 percent; and common stock in retained earnings (K s ) is 10.4 percent. The firm has a tax bracket of 40 percent. Calculate Wiley's WACC.

  • Unleverage Firm and After-tax WACC

    The firm pays corporate taxes at a rate of 35% but otherwise operates in perfect capital market. What is the firm's WACC?

  • Micro Spinoffs Inc.

    If the firms tax bracket is 35%, what is the after-tax cost of the debt?

  • Calculating WACC: What is the weighted average cost of capital?

    The firm is in the 35% tax bracket. What is the weighted average cost of capital?

  • Component cost and WACC

    The expected return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. CGT is in the 40% tax bracket. 1. What is the best estimate of the after-tax cost of debt for CGT? 2.

  • Weighted Average Cost of Capital

    Please see attached file: If Firm X has a 28% cost of equity and a 10% before tax cost of debt capital.  The firm's debt to equity ratio is 2.  Firm X is interested in investing in a telecom project. The corporate tax rate is 35%.

  • Finance (cost) problems: Sullivan Cement Company, Addison Glass Company, Mead Corporation, and Global Technology.

    Addison is in a 25 percent tax bracket. The firm wishes to know what the after-tax cost of a new bond issue is likely to be.

  • Tax calculation

    What is the company's federal income tax bill for the year? The taxble income is 10,500,000. We look at the corporate tax rates, the firm falls into the 10,000,000-15,000,000 bracket.

  • WACC and Corporate Tax for a Firm

    349025 WACC and Corporate Tax for a Firm A firm has a corporate tax rate of 35%, a cost of debt of 8.25%, with a 15% cost on its equity capital. There is $15,000,000 in debt and $25,000,000 in equity in its capital structure.

View More Related Solutions