Question: I'm need help working out these 3 problems. Not sure how to set this up in excel forcalculations. 1. Eaglet Corporation has the following target

I'm need help working out these 3 problems. Not sure how to set this up in excel forcalculations.

I'm need help working out these 3 problems. Not sure how to

1. Eaglet Corporation has the following target and costs associated with its capital structure. Based on these parameters what is Eaglet Corporations weighted average cost of capital? Target common equity weight: 60 percent Target debt weight: 40 percent Cost of equity: 13 percent Cost of debt: 6 percent Tax rate: 35 percent WACC = 9.36 percent WACC = 6.63 percent WACC = 10.20 percent 2. Riddle Industries has the following parameters related to its stock and firm. Beta: 0.85 Recent Dividend 0.75 dollars Dividend Growth Rate 4.5 percent Expected return on market 12.5 percent Treasury Bills Yield 4.3 percent Most recent stock price 64.00 dollars What is the cost of equity using DDM? What is the cost of equity using SML? 5.72 percent, 11.27 percent 5.52 percent, 6.97 percent 4.5 percent, 12.50 percent 3. Given the following information for UARE Inc. Find the WACC. Tax rate 35 percent Debt: Bonds outstanding: 6000 Coupon on bonds: 6 percent Par value of bonds: $1000 Bonds selling at what percent of par: 105 Bonds make coupon payments: semiannually Years to maturity of bonds 25 Common Stock: Shares Outstanding: 185,000 Current price/share: $58.00 Beta: 1.10 Market Information: Risk premium: 7 percent Riskfree rate 5 percent WACC = 9.35% WACC = 8.68% WACC = 10.08%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!