4. Celebrity plc. has a target debt-equity ratio of 0.8. Its WACC is 10.5% and the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
4. Celebrity plc. has a target debt-equity ratio of 0.8. Its WACC is 10.5% and the tax rate is 35 per cent (a) If the firm's cost of equity is 15 per cent what is its pre-tax cost of debt? (b) If instead you know that the after-tax cost of debt is 6.4 per cent, what is the cost of equity? 4. Celebrity plc. has a target debt-equity ratio of 0.8. Its WACC is 10.5% and the tax rate is 35 per cent (a) If the firm's cost of equity is 15 per cent what is its pre-tax cost of debt? (b) If instead you know that the after-tax cost of debt is 6.4 per cent, what is the cost of equity?
Expert Answer:
Answer rating: 100% (QA)
Given DE Ratio is 08 Hence debt value is 80 and Equity value is 100 and Total value DE is 180 WA... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Statement of Financial position Adjustment and Preparation Presented below is the statement of financial position of Sargent Corporation for the current year. 2010 The following information is...
-
The statement of financial position as at 31 December 20X2 of Zoom Products Ltd included: Trade receivables...............................85,360 The financial statements for the year ended 31...
-
Statement of Financial Position Preparation Presented below are a number of statement of financial position items for Montoya. Inc., for the current year, 2010. Instructions Prepare a classified...
-
On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows: a. Prepare a multiple-step income statement for the year...
-
Reconsider the patient satisfaction data in Table 4E.11. Fit a multiple regression model using both patient age and severity as the regressors. (a) Test for significance of regression. (b) Test for...
-
A thin, 75.0-cm wire has a mass of 16.5 g. One end is tied to a nail, and the other end is attached to a screw that can be adjusted to vary the tension in the wire. (a) To what tension (in Newtons)...
-
How do search engines make use of search? Research a few of the best-known search engines, and try to find out what kind of search algorithms they use. How efficient do you think they are at...
-
Design a relational database for a video rental store. The store, which rents only DVDs and has no sales other than DVD rentals, has approximately 5,000 customers and approximately 1200 DVD titles....
-
Please, draft a risk-shifting clausea representation given by the Seller of business assets about pending or threatened litigation--from two different perspectives: First, taking on the role of the...
-
On June 1, Cindy Godfrey started Divine Designs Co., a company that provides craft opportunities, by investing $12,000 cash in the business. Following are the assets and liabilities of the company at...
-
Which of the following is true about the grievance procedure? If a grievance has major precedent-setting implications or involves potentially major costs but may have merit, the IR representative...
-
Build a credible online reputation.
-
Watch at least three videos of interviews with executives talking about corporate values. In four to five paragraphs, summarize what you learned. Consider the following options for gathering...
-
Go to the ECBs website and locate the most recent introductory statement made by the president of the ECB at the press conference following a Governing Council meeting. What was the Governing...
-
Read a magazine article about global business that includes issues about cross-cultural differences. Consider the following online sources for an article: https://www.bloomberg.com/europe ...
-
Read three online newspaper articles from a country of interest. You should be able to find an online English-language newspaper for your chosen country fairly easily. Go to these websites: ...
-
Follow the steps in the document, then attach the resultant file. Install a VMWare instance of Kali Linux or use a pre-built VM, link listed below. Add a username of 1, password of user402! Log in as...
-
Why is inventory management important for merchandising and manufacturing firms and what are the main tradeoffs for firms in managing their inventory?
-
Statement of Financial Position Adjustment and Preparation, the adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented below. Additional information:...
-
What are the basic elements of the framework? Briefly describe the relationship between the moment in time and period of time elements?
-
The financial statement of M&S are presented in Appendix 5B or can be accessed at the books companion website, www.wiley.com./college/kiesoifrs. Instructions Refer to these financial statements and...
-
The inversion point of a gas can be mathematically expressed as (a) \(T_{i}=\frac{2 a b}{R}\) (b) \(T_{i}=\frac{2 b}{R a}\) (c) \(T_{i}=\frac{2 a}{R b}\) (d) None of these.
-
Residual free energy is defined as (a) \(G^{R}=G-G^{\mathrm{ig}}\) (b) \(G^{R}=G^{\mathrm{ig}}-G\) (c) \(G^{R}=G+G^{\mathrm{ig}}\) (d) None of these.
-
Departure functions are useful to calculate the thermodynamic property of real fluids (a) When the \(P-V-T\) data of the substance is unavailable (b) When the \(P-V-T\) data of the substance is...
Study smarter with the SolutionInn App