Calculate barbows after-tax weighted average cost of capital

Assignment Help Corporate Finance
Reference no: EM13336369

Barbow Enterprises, Inc., is considering an expansion in their operations. One of the first items they want to examine is their cost of capital. According to the accounting department, the following items and their respective costs have been identified:

The cost of Common Equity: 15%
The before tax cost of debt: 12%
No Preferred stock
They have also calculated the marginal tax rate to be 40% and the stock sells at its book value.

Barbow Enterprises Inc.

Balance Sheet

Assets



Liabilities and Owners' Equity









Cash

$240

Long Term Debt


$2,304

Accounts Receivable

480

Equity


3,456

Inventories

720



Net P&E

4,320



  Total Assets

$5,760

Total Liabilities and owners' Equity


$5,760

 

Calculate Barbow's after-tax weighted average cost of capital, using the data in the balance sheet above.

Deliverable:. Use a Microsoft Excel spreadsheet that illustrates your calculations. You may use the formulas embedded in Microsoft Excel and/or a financial calculator for these calculations.

Reference no: EM13336369

Questions Cloud

Find the total angular magnification of the microscope : You have a compound microscope with a barrel of length 157 mm. Find the total angular magnification of the microscope for a person whose near point is 25.0 cm away
Caculate the discounted payback period for the project : a project has annual cash flows ( including the intial year) of -90,000, 65000, 40,000. 50,000, 55,0000 and 50,000 . caculate the discounted payback period for this project if the discount rate is 14%
Choose an appropriate ephemeral port number : Show the entries for the header of a UDP user datagram that carries a message from a TFTP client to a TFTP server. Fill the check sum with 0s.
What is the induced emf opposing the increasing current : The current in a solenoid is increasing at a rate of 6.37 A/s. The cross-sectional area of the solenoid is ? cm^2, and there are 333 turns on its 11.5 cm length. What is the induced emf opposing the increasing current
Calculate barbows after-tax weighted average cost of capital : Barbow Enterprises, Inc., is considering an expansion in their operations. One of the first items they want to examine is their cost of capital. According to the accounting department,
What is the sequence number of the 120th packet : A sender sends a series of packets to the same destination using 4-bit sequence of numbers. If the sequence number starts with 0, what is the sequence number of the 120th packet?
How fast was the volkswagen going just before the impact : The stoplight had just changed and a 1900kgCadillac had entered the intersection, heading north at 3.4m/s , How fast was the Volkswagen going just before the impact
Determine if an ip packet is carrying an icmp packet : Provide the definition and picture of Intra-domain routing and Inter-domain routing.
Find the magnetic field at the center of the loop : A square wire loop (size L x L) carries current I. Find the magnetic field at the center of the loop

Reviews

Write a Review

 

Corporate Finance Questions & Answers

  Explain walmarts weighted average cost of capital

Walmarts weighted average cost of capital - Required rate of return for the market

  Determine a company ranking in the industry

Find Wal-Mart's ranking in the industry including comparison of the corporation to its competitors. Good metrics to determine a company's ranking in the industry

  Find risk premium on the market

Risk Free rate 4 percent and the expected return on the market portfolio is 12%. Using the capital asset model:

  Explain and discuss loan factors

An effectively organized loan application decrease the time spent waiting for a response to a loan request. According to John Nelson III, SCORE counselor in Rhode Island & vice president of a major United State bank,

  Decide whether or not sunny should undertake the investment

Prepare supporting calculations to decide whether or not Sunny should undertake the investment in the theme park given a risk adjusted discount rate of 11.80% per annum.

  What is the value of milanos pizza club

Each of these cash flow streams is assumed to be a perpetuity. The corporate tax rate is 40 percent. Using the FTE approach, what is the value of Milano's Pizza Club?

  Calculate your arithmetic and geometric mean returns

Calculate your dollar and percentage return on the investment in Loewen for each year and calculate your dollar return on the investment - calculate your arithmetic and geometric mean returns for this period.  Why are the arithmetic and geometric mea..

  Find expected eps of dell in the coming year

The risk-free rate of return is 6% and the expected return on the market portfolio is 14%. The stock of Old Quartz Gold Mining Company has a beta of -0.25.

  What is minimum expectation for the selling price

What is his minimum expectation for the selling price of the assets of the project at the end of year 10

  Working capital financing policies

Finance permanent net working capital with equity and temporary net working capital with a short-term loan at 12% and calculate the cost of each option. Which would you choose? Why?

  Preparing an analysis of the market

Create your portfolio. First, set out your investment objectives and decide how much risk you are willing to take. You may invest for yourself or for an imaginary client.

  Principles of business finance lab

Charting capability to calculate beta for our stock. You will begin by choosing the "insert" option above the Excel spreadsheet. You will choose "chart" and then "XY (scatter)" for the type of chart. The chart wizard will guide you through the proces..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd