WACC AND OTHER RATES OF DISCOUNT Table 72 Balance sheet Assets Current assets Long-lived assets $500,000...

 

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WACC AND OTHER RATES OF DISCOUNT Table 72 Balance sheet Assets Current assets Long-lived assets $500,000 600,000 $1,100,000 Equities Current liabilities Trade creditors $100,000 Bank loans 250,000 Long-term debt 300,000 Stock equity Preferred stock 100,000 Common stock 200,000 Retained earnings 150,000 $1,100,000 Assume the market value of the debt and stock are equal to the book values. The expected internal rates of return (IRR) of the different securities to the investors and also the costs to the firm are: Bank loans 0.10 Long-term debt 0.09 Preferred stock 0.10 Common stock 0.15 Compute the weighted average cost of capital. Assume the corporate income tax rate is 0.4. amon stock of the BAC Company is selling at $1.00 per share and is WACC AND OTHER RATES OF DISCOUNT Table 72 Balance sheet Assets Current assets Long-lived assets $500,000 600,000 $1,100,000 Equities Current liabilities Trade creditors $100,000 Bank loans 250,000 Long-term debt 300,000 Stock equity Preferred stock 100,000 Common stock 200,000 Retained earnings 150,000 $1,100,000 Assume the market value of the debt and stock are equal to the book values. The expected internal rates of return (IRR) of the different securities to the investors and also the costs to the firm are: Bank loans 0.10 Long-term debt 0.09 Preferred stock 0.10 Common stock 0.15 Compute the weighted average cost of capital. Assume the corporate income tax rate is 0.4. amon stock of the BAC Company is selling at $1.00 per share and is