ces Braxton Corp. currently has one million shares outstanding but no debt. If needed, however, the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ces Braxton Corp. currently has one million shares outstanding but no debt. If needed, however, the company can borrow at 6.8 percent interest. The company's WACC is currently 8.6 percent and the tax rate is 35 percent. a. What is the company's cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 8.6 % b. If the firm converts to 30 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 30 % c. If the firm converts to 40 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 40 % d-1 If the firm converts to 30 percent debt, what is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 9.21 % d-2If the firm converts to 40 percent debt, what is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 7.51% ces Braxton Corp. currently has one million shares outstanding but no debt. If needed, however, the company can borrow at 6.8 percent interest. The company's WACC is currently 8.6 percent and the tax rate is 35 percent. a. What is the company's cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 8.6 % b. If the firm converts to 30 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 30 % c. If the firm converts to 40 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 40 % d-1 If the firm converts to 30 percent debt, what is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 9.21 % d-2If the firm converts to 40 percent debt, what is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 7.51%
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Sunita inherits $45,000 from a distant relative. She decides to invest her inheritance in a diversified, dividend-paying mutual fund. At the time of her initial investment, she purchases 1,500 shares...
-
Indicate whether each item would be added ( + ) or subtracted ( ) in the computation of cash flow from operating activities using the indirect method. ______ 1. Accrued expenses (increase). ______...
-
What are the basic similarities and differences between managing in a production environment and managing in a services environment?
-
By using information provided in the previous problem, perform a regression of the portfolio returns vs. S&P500 index returns for the period of 24 months. Report: The slope of the regression, its...
-
Barton Simpson, the chief financial officer of Broadband Inc. could hardly believe the change in interest rates that had taken place over the last few months. The interest rate on A2 rated bonds was...
-
Find the critical points of the function f ( x ) = x 3 + 1 . 5 x 2 4
-
16) Todd tiene una cuenta de margen con $17 400 en efectivodisponible. El margen inicial es del 70 por ciento y el margen demantenimiento es del 30 por ciento. Cul es el nmero mximo deaccio 1 answer
-
What are the influence tactics Managers choose ?
-
What are the eesponsibilities of safety and health regulatory agencies with respect to the following: Citations and Penalties Some issues companies go through with being compliant
-
What factors have the most impact on its business strategy? Why?
-
How do cognitive and emotional factors interact in shaping the dynamics of conflict, and what strategies can be employed to address both dimensions effectively ?
-
1. State three factors that affect observed melting point? 3 pts
-
Powell Corporation, a large manufacturer of aircraft components, is trying to determine whether to to replace its existing 1,000-ton hydraulic steel press with a new computerised press. Powell's CEO...
-
Suppose the index goes to 18 percent in year 5. What is the effective cost of the unrestricted ARM?
-
Financial Statement Effects of FIFO and Weighted Average} The chart below lists financial statement items that may be affected by the use of either the FIFO or weighted average inventory costing...
-
In 20x7, Krall Corporation had year-end assets of $1,100,000, sales of $1,580,000, net income of $180,000, net cash flows from operating activities of $360,000, purchases of plant assets of $240,000,...
-
The list that follows itemizes Furlong Corporations transactions. Identify each as (a) an operating activity, (b) an investing activity, (c) a financing activity, (d) a noncash transaction, or (e)...
Study smarter with the SolutionInn App