Target debt-equity ratio-what is its pretax cost of debt

Assignment Help Financial Management
Reference no: EM131130297

Buddy Corp. has a target debt-equity ratio of 0.60. Its WACC is 10.5% and the tax rate is 30%. If the company's cost of equity is 16.5% what is its pretax cost of debt?

Reference no: EM131130297

Questions Cloud

Beckett organics john beckett enjoys vegetables : Case Study - Beckett Organics John Beckett enjoys vegetables, so much so that he has given up his full-time job as a lawyer to concentrate on growing and marketing organic vegetables. He started growing vegetables 20 years ago in his back garden a..
Find the beta of each stock : Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. Rate of Return Scenario Market Aggressive Stock A Defensive Stock D Bust −8% −10% −6% Boom..
Conduct an attack within the united states : Conduct an attack within the United States, and complete an in-depth profile on the organization In 5-7 pages (double-spaced,) provide a narrative explaining the organization's origins, ideology, goals & objectives.
Role of stakeholders in quality and risk management : Discuss the role of stakeholders in quality and risk management including the relationships between employers and third party payers with health care organizations. What roles do each play in quality and risk management, if any? What is the impac..
Target debt-equity ratio-what is its pretax cost of debt : Buddy Corp. has a target debt-equity ratio of 0.60. Its WACC is 10.5% and the tax rate is 30%. If the company's cost of equity is 16.5% what is its pretax cost of debt?
Write a critique on one the movies that involve dancing : Writing a critique on one the movies that involve dancing and I picked "footloose".- What specific ?movement sequence are you relating to?
Prepare a ten pages report about neurobiology of hiv-aids : Prepare a ten pages report about Neurobiology of HIV/AIDS. The definition of the disease. What causes of the diseas? Estimated prevalence of the disease. What happen to the neurons.
What must be the one-year rate on the euro : The spot US dollar-euro exchange rate is $1.10/euro. The one-year forward exchange rate is $1.0782/euro. If the one-year dollar interest rate is 3%, then what must be the one-year rate on the euro? Both rates are continuously compounded.
Write a formative essay on money and banking of bitcoin : Bitcoin was designed and implemented in 2009 by a Japanese programmer, reputedly Satoshi Nakamoto (‘reputedly' because the real name of the inventor is uncertain). The bit coin scheme is based on a peer-to-peer network over the Internet, similar to B..

Reviews

Write a Review

 

Financial Management Questions & Answers

  The weight of debt in the firms capital structure

As a consultant to GBH skiwear, you have been ask to compute the appropriate discount rate to use to evaluate the purchase of a new warehouse facility. The firm's marginal tax rate is 34%. What discount rate should you use to evaluate the warehouse p..

  Financial management concepts-incremental cash flows

Details TechMedia, Inc. is a U.S. firm that is planning to build a new production facility in either the USA or China. The initial cost to build the facility will be $10 million if built in the USA or ¥55 million if built in China. Your analysis shou..

  Which of the statements below is

1 which of the statements below is false?a the purpose of studying financial statements is to understand those portions

  Apply capital budgeting and time value money concepts

You have recently been hired by ABC corporation and your first assignment is to help them decide which of these two options should be pursued. ABC Corporation has a machine that requires repairs or should be replaced.

  Calculate the expected dividend yield

You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years. Calculate the growth r..

  Money spent on the market research for this new offering

Loveland, inc. is a furniture store that is considering adding appliances to its offerings. Which of the following should be considered incremental cash flows of this project? Money spent on the market research for this new offering?

  What is the break even interest rate

A firm will sell an asset for $75,000 in three years and the cost of producing the asset today is $36,000. If the interest rate is 12 % per year, will the firm make a profit? What is the breakeven interest rate?

  Coupon bonds on the market with nine years left to maturity

The Timberlake-Jackson Wardrobe Co. has 7 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments. If the bond currently sells for $1,038.50, what is its YTM?

  Future value of annuity problem

You deposit $8,000 into a retirement account at the end of the next 12 years earning 10% interest, what is the future value of your retirement after 12 years?

  What is the stocks required rate of return

Your company's stock sells for $150 per share, its last dividend was $3.00 per share, and its growth rate is 4%. What is the stock's required rate of return? What is the stock's Beta if the average market return for the stock is 12%, and the interest..

  Propulsion sciences stock dividend

Propulsion Sciences' (PS) stock dividend has grown at 10% per year for many years. Investors believe that a year from now the company will pay a dividend of $3 and that dividends will continue their 10% growth indefinitely. If the market's required r..

  Price change and how much was due to the dividend income

At the beginning of last year, you invested $4,000 in 80 shares of the Chang Corporation. During the year, Chang paid dividends of $5 per share. At the end of the year, you sold the 80 shares for $59 a share. Compute total HPY on these shares and ind..

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