A company's capital structure is as follows. Em 10 million £1 ordinary shares 10 Reserves 4 13% irredeemable loan stock 7--21-- Current market prices for the company s securities are as follows. £1 ordinary shares 280p 13% irredeemable loan stock £100 The company is paying corporation tax at a rate of 30%. The cost of the company's equity capital has been estimated at 12% per annum. The company's weighted average cost of capital for capital investment appraisal purposes is A. 11.42% B. 12.20% C . 11.03% D. 12.30%

A company's capital structure is as follows. Em 10 million £1 ordinary shares 10 Reserves 4 13% irredeemable loan stock 7--21-- Current market prices for the company s securities are as follows. £1 ordinary shares 280p 13% irredeemable loan stock £100 The company is paying corporation tax at a rate of 30%. The cost of the company's equity capital has been estimated at 12% per annum. The company's weighted average cost of capital for capital investment appraisal purposes is A. 11.42% B. 12.20% C . 11.03% D. 12.30%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 8P

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An accountant for Stability Inc. must calculate the weighted average cost of capital of the corporation using the following information. Interest Rate Accounts payable $35,000,000 0 Long-term debt 10,000,000 8% Common stock 10,000,000 15% Retained earnings 5,000,000 18% What is the weighted average cost of capital of Stability? Select one: a. 8.00% b. 10.25% c. 12.80% d. 6.88%
A company finances its operations with 57 percent debt and the rest using equity. The annual yield on the company's debt is 6% and the required rate of return on the stock is 14.6%. What is company's WACC? Assume the tax rate is 30%
Calculate the weighted average cost of capital (WACC) of company ABC Inc., if: I. The company’s current capital structure consists of 35% from a long-term corporate bond, 30% from new common stock to be issued in the coming months, 20% from retained earnings and the rest is financed by a bank loan. The corporate tax rate is 35%. II. The company’s cost of debt from the bond issuance is 9% and from the bank loan is 8%. III. The current stock price of common stock is €10, the current dividend (Do) is €0.80 per share and dividends are expected to grow by 2% per year. New common stock flotation costs stand at 3% of the current stock price.
The company's capital structure is as follows: Debt Weight 25%, Preferred Stock Weight 25%, Common equity Weight 50%. The cost of debt is 12%, the cost of preferred stock is 15% and the cost of common equity is 0.19. Calculate the company's weighted average cost of capital. Select one: O a. 0.1325 Ob. 0.0650 Oc. 0.1250 Od. 0.1625 O e. All the given choices are not correct
A company's capital structure is as follows:Debt Weight 10%, Preferred Stock Weight 50%, Common equity Weight 40%, The cost of debt is 13%, the cost of preferred stock is 19% and the cost of common equity is 15%. Calculate the company's weighted average cost of capital. on Select one: O a. 0.168 O b. 0.368 O c. 0.668 O d. 0.268 O e. None of the options ENG n9 91% ...alo ロー F6 F7 F9 F10 F11 @ %23 & 3 4 7 8 W E R T Y 41 A S F GYH J-K C V) BYNIM IS Alt 10 くの * CO
1. The company A has 10 million shares of common stock outstanding. The stock currently trades at $4.85 per share. The company also issues 10 million debt with 7% interest rate and will be repaid in next two years. The firm can also obtain debt with the same interest rate in the future. Company A’s weighted average cost of capital is 10.5 percent. The tax rate is 35 percent.a. Construct company A’s market value balance sheetb. What is the company’s cost of equity capital?c. What is the company’s unlevered cost of equity capital?d. Company A is thinking to invest on a project cost $5 million. Should the company choose debt financing or equity financing assume the financial distress cost is zero? How about if the financial distress cost is not zero?
Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96
What is the weighted average cost of capital for SKYE Corporation given the following information? Equity shares outstanding 1 million Stock price per share $ 23 Yield to maturity on debt 7.68% Book value of interest - bearing debt $14 million Coupon interest rate on debt 9% Interest rate on government bonds 7% SKYE's equity beta 0.75 Historical excess return on stocks 5.8% Tax rate 40% Note: Enter your answer to 1 decimal place.
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Napa plc has 100 million £0.25 ordinary shares in issue with a current market value of £1.20 per share. The cost of ordinary shares is estimated at 12 per cent. The business also has 6 per cent irredeemable loan notes in issue with a nominal value of £75 million. These are currently quoted at £80 per £100 nominal value. The tax rate is 20 per cent. What is the weighted average cost of capital of the business?
The company's capital structure is as follows Debt Weight 25%. Preferred Stock Weight 25% Common equity Weight 50%. The cost of debt is 12%6, the cost of preferred stock is 15% and the cost of common equity is 0.244 Calculate the companys weighted average Cost of tapital. Select one: Oa ob920 Ob.0.1895 Oc01520 Od All the given choices are not correct Oe 0.1595
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