Calculate the WACC for a firm with a debt-equity ratio of 1.9. The debt pays 10 percent

Fantastic news! We've Found the answer you've been seeking!

Question:

Calculate the WACC for a firm with a debt-equity ratio of 1.9. The debt pays 10 percent interest and the equity is expected to return 17 percent. Assume a 45 percent tax rate and risk-free debt.

Related Book For answer-question

Entrepreneurial Finance

ISBN: 978-0538478151

4th edition

Authors: J . chris leach, Ronald w. melicher

See More Books

Posted Date: Mar 08, 2024 11:09 PM

See More Questions

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
Calculate the WACC for a firm with a debt-equity ratio of 1.5. The debt pays 10 percent interest and the equity is expected to return 16 percent. Assume a 35 percent tax rate and risk-free debt.
1 Tax Ben 2 Q1 Total financial income (expense) 2,000 Tax rate 21% What is the tax benefit (burden)? Do not use the dollar sign 2 NFE AT 1 Q1 Net financial expense 1,200 Tax benefit 300 What is net...
Calculate the current and quick ratio at the end of eachyear.Note: Round your answers to 1 decimal place.b. Assuming a 365-day year for all calculations, compute thefollowing:i. The collection pe...
What voltage must be applied to an 8.00 nF capacitor to store 0.160 mC of charge?
Prepare the 2015 combined common-size, common-base year balance sheet for Just Dew It. Just Dew It Corporation reports the following balance sheet information for 2014 and 2015. Use this information...
SWIGART v. BRUNO CALIFORNIA COURT OF APPEALS 13 CAL. APP. 5TH 529 2017 According to the American Endurance Ride Conference, endurance riding is a highly competitive and demanding sport. It is...
The comparative balance sheet of Juras Equipment Co. for Dec. 31, 2013 and 2012, is: The income statement for the year ended December 31, 2013, is as follows: The following additional information was...
Consider the arithmetic series 7+13+19+25+31+37+43 +...and answer thequestions which follow. a) (i) T. (ii) Express Tin terms of S (2) (2) b) (i) T =........... ... S =... (2) (ii) Express T2 in...
Build-A-Bear Workshop, Inc. (BAB) operates a chain of 344 stores in North America and the United Kingdom at which customers make their own stuffed animal. In 20X0, the average area for a BAB store...
Consider a certain type of machinery that you can buy in the USA for $60,000 and in Japan for 6,780,000 yen. The current exchange rate is 0.01 dollar per yen. Carefully following all numeric...
Two investment opportunities, A and B, are available to you. You can choose to invest in one or both or none. Here are the timelines of their cash flows: Year A B 0 -$150 -225 1 40 175 2 80 125 3 100...
The common stock of GameStop does not pay a cash dividend. The stock is relatively risky. Assume that the beta for GameStop is 1.8 and that GameStop closed at a price of $150. Hypothetical option...
Anheuser LLC wants to acquire Busch LLC. Anheuser expects the acquisition to increase its cash flow from assets by $18 million per year forever, in addition to the cash flow from assets from Busch....
Patrick is donating a certain percentage of his profits to the Special Olympics. What is he accomplishing by doing so? Explain
Discuss the physical significance of the two postulates of electrostatics. How the differential form of these postulate can be converted into integral form. Also derived the electric field intensity...
If (x) 0 on the interval [a, b], the definite integral gives the exact area under the curve between x = a and x = b.
What is the importance of the relationship between a ventures current liabilities and its total debt?
Bike-With-Us Corporation, a specialty bicycle parts replacement venture, was started last year by two former professional bicycle riders who had substantial competitive racing experience, including...
Assume you started a new business last year with $50,000 of your own money, which was used to purchase equipment. Now you are seeking a $25,000 loan to finance the inventory needed to reach this...
Using an economic balance sheet, which of the Laws current financial assets is most concerning from an asset allocation perspective? A. Equities B. Real estate C. Fixed income Raye uses a costbenefit...
Using the economic balance sheet approach, the Laws economic net worth is closest to: A. $925,000. B. $1,425,000. C. $1,675,000. Raye uses a costbenefit approach to rebalancing and recommends that...
Raye believes the previous advisers asset class specifications for equity and derivatives are inappropriate given that, for purposes of asset allocation, asset classes should be: A. diversifying. B....

Calculate the WACC for a firm with a debt-equity ratio of 1.9. The debt pays 10 percent

Question:

Expert Answer:

To calculate the Weighted Average Cost of Capital WACC for a firm with the given parameters you have ... View the full answer

Entrepreneurial Finance

Students also viewed these finance questions