78. Calculate the WACC of the firm given the following information: (a) Equity -$20,000, (b) Debt - $20,000, (c) Preferred Stock - $4,000, (d) Tax Rate?" 30%, (e) Debt? Coupon $70, Price $1,250, Time until maturity: 20, (f) Equity, Market Rate 10%, and Risk free rate 3%, Beta 1.2, (g) Preferred Stock, Coupon $50, Price $55.

79. Using the information in the above problem and the additional information presented in here, calculate the WACC of the firm given the following information: (a) Equity, Most Recent Dividend $2.00, Growth Rate 3%, and Price $18.

Solution Preview

Please see the attached file.

calculate the WACC
78. Calculate the WACC of the firm given the following information: (a) Equity -$20,000, (b) Debt - $20,000, (c) Preferred Stock - $4,000, (d) Tax Rate 30%, (e) Debt Coupon $70, Price $1,250, Time until maturity 20, (f) Equity Market Rate 10%, and Risk free rate 3%, Beta 1.2, (g) Preferred Stock Coupon $50, Price $55.

An all equity firm has a required return on its equity of 15%, has 10 million shares outstanding, and pays no taxes. The shares are currently trading at $6.00 each. Thefirm is planning to borrow $9 million at 5% interest rate and use the borrowed funds to buyback a portion of its equity. Calculatethe new value of thefirm a

Suppose a firm is unleveraged and has an unleveraged required return, r, of 15%. Thefirm borrows 30% of the value of thefirm at rd = 8%. Because of the financial leverage, re becomes 18%. Thefirm pays corporate taxes at a rate of 35% but otherwise operates in perfect capital market. What is thefirm's WACC?
a) Assuming th

Suppose a firm is unleveraged and has an unleveraged required return, r, of 15%. Thefirm borrows 30% of the value of thefirm at rd = 8%. Because of the financial leverage, re becomes 18%. Thefirm pays corporate taxes at a rate of 35% but otherwise operates in perfect capital market. What is thefirm's WACC?
a) Assuming th

CalculatetheWACC for a firm with a debt-equity ratio of 1.5. The debt pays 6% interest and the equity is expected to return 8%. Assume a 35% tax rate and risk-free debt.

Chandeliers Corp. has no debt but can borrow at 7.9 percent. Thefirm's WACC is currently 9.7 percent, and the tax rate is 35 percent.
a. What is the company's cost of equity?
b. If thefirm converts to 35 percent debt, what will its cost of equity be?
c. If thefirm converts to 50 percent debt, what will its cost of eq

Co. A has a debt-to-firm ratio of 30% and an equity-to-firm ratio of 70%. The required rate of return on equity of Co. A is 15% while the long term borrowing rate is 10% Co. A's marginal tax rate is the statutory rate of 40%. Calculate its after-tax weighted average cost of capital.

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

Find theWACC of William (Apple) Tell Computers. The total book value of thefirm's equity is $10 million; book value per share is $20. The stock sells for a price of $30 per share, and the cost of equity is 15 percent. Thefirm's bonds have a par value of $5 million and sell at a price of 110 percent of par. The yield to maturi

ExxonMobil's required return for equity, Re is 14%. Its required return for debt, Rd is 8%, its debt-to-total-value ratio L, is 35%, and its marginal tax rate, T is 40%, calculate its (adjusted WACC)?

Factors impacting WACC:
1) Firms paying out more earnings as dividends--increase, decrease or uncertain?
2) thefirm increase its debt ratio--increase, decrease or uncertain?
3) firm stops risk-adjusting WACC-increase, decrease or uncertain?
For each question does the factor increase, decrease WACC or is the factor u