Lesters has debt equity ratio of .6 and a tax rate of 35 percent. The firm does

Question

Lesters has debt equity ratio of .6 and a tax rate of 35 percent. The firm does not issue preferred stock. The cost of equity is 14.5 percent and after tax cost is 4.8 percent. What is the weighted average cost of capital?
Book worm is an all equity firm that has 145,000 shares of stock outstanding. The company is in the process of borrowing $175,000 at 6.8% interest to re-purchase 8000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?
Glass & Pewter is expected to pay an annual dividend of $1.10 a share next year. The market price of the stock is $21.80 and the growth rate is 4.5% what is the firms cost of equity?

S.F bistro has a cost of equity of 13.9% and pre-tax cost of debt of 6.8% the required return on the assets is 12.9 percent. What is the firms debt equity ratio based on M&M II with no taxes.


Lesters has debt equity ratio of .6 and a tax rate of 35 percent. The firm does not issue preferred stock. The cost of equity is 14.5 percent and after tax cost is 4.8 percent. What is the weighted average cost of capital?
Book worm is an all equity firm that has 145,000 shares of stock outstanding. The company is in the process of borrowing $175,000 at 6.8% interest to re-purchase 8000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?
Glass & Pewter is expected to pay an annual dividend of $1.10 a share next year. The market price of the stock is $21.80 and the growth rate is 4.5% what is the firms cost of equity?

S.F bistro has a cost of equity of 13.9% and pre-tax cost of debt of 6.8% the required return on the assets is 12.9 percent. What is the firms debt equity ratio based on M&M II with no taxes.


Lesters has debt equity ratio of .6 and a tax rate of 35 percent. The firm does not issue preferred stock. The cost of equity is 14.5 percent and after tax cost is 4.8 percent. What is the weighted average cost of capital?
Book worm is an all equity firm that has 145,000 shares of stock outstanding. The company is in the process of borrowing $175,000 at 6.8% interest to re-purchase 8000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?
Glass & Pewter is expected to pay an annual dividend of $1.10 a share next year. The market price of the stock is $21.80 and the growth rate is 4.5% what is the firms cost of equity?

S.F bistro has a cost of equity of 13.9% and pre-tax cost of debt of 6.8% the required return on the assets is 12.9 percent. What is the firms debt equity ratio based on M&M II with no taxes.


Lesters has debt equity ratio of .6 and a tax rate of 35 percent. The firm does not issue preferred stock. The cost of equity is 14.5 percent and after tax cost is 4.8 percent. What is the weighted average cost of capital?
Book worm is an all equity firm that has 145,000 shares of stock outstanding. The company is in the process of borrowing $175,000 at 6.8% interest to re-purchase 8000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?
Glass & Pewter is expected to pay an annual dividend of $1.10 a share next year. The market price of the stock is $21.80 and the growth rate is 4.5% what is the firms cost of equity?

Explanation / Answer

Answer to Question 1:

Debt-Equity Ratio = 0.60
Tax Rate = 35%
Cost of Equity = 14.50%
Aftertax Cost of Debt = 4.80%

WACC = (D/A) * Aftertax Cost of Debt + (E/A) * Cost of Equity
WACC = (0.60/1.60) * 4.80% + (1/1.60) * 14.50%
WACC = 0.375 * 4.80% + 0.625 * 14.50%
WACC = 10.86%

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.