A company has provided the following financial date: A target capital structure that is 50% debt and
Fantastic news! We've Found the answer you've been seeking!
Question:
- A company has provided the following financial date:
A target capital structure that is 50% debt and 50% equity
After-tax cost of debt is 8%
Cost of retained earnings is estimated to be 13.5%
Cost of equity is estimated to be 14.5% if the company issues new common stock
Net Income is $2,500
The company is considering the following investment projects
Project | Size of Project | RR of project |
A | $1,000 | 12% |
B | $1,200 | 11.5% |
C | $1,200 | 11% |
D | $1,200 | 10.5% |
E | $1,000 | 10% |
If the company follows a residual dividend policy, what will be its payout ratio
Expert Answer:
1 The WACC with retained earnings 85013550 1075 The WACC with new common stock 85... View the full answer
Posted Date:
