Assume the before-tax component costs of equity

Assignment Help Financial Management

Reference no: EM131303388

Suppose that MNINK Industries’ capital structure features 64 percent equity, 8 percent preferred stock, and 28 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.60 percent, 9.50 percent, and 9.00 percent, respectively. What is MNINK’s WACC if the firm faces an average tax rate of 34 percent? (Round your answer to 2 decimal places.)

Reference no: EM131303388

Questions Cloud

The binomial model is better for complex situations : The Black Scholes model is simpler to use, but for complex situations, the binomial model is the necessary tool. The Black Scholes model is the simplest to use and the best used for complex situations. the binomial model is better for complex situati..

What is the cash collected in july : Consider a company that has sales in May, June, and July of $10.3 million, $12.3 million, and $9.3 million, respectively. The firm is paid by 35 percent of its customers in the month of the sale, 40 percent in the following month, and 22 percent in t..

What is the net present value of the refunding : The State of Idaho issued $2,000,000 of 7% coupon, 20-year semiannual payment, tax-exempt bonds 5 years ago. The bonds had 5 years of call protection, but now the state can call the bonds if it chooses to do so. The call premium would be 5% of the fa..

Jobs would have to be generated before a profit was made : A business student wants to set up a business completing tax forms for other students. The price would be for $50 for each job. Fixed expenses include $395 for the purchase of tax software. Students would be hired to complete the forms paying them fo..

Assume the before-tax component costs of equity : Suppose that MNINK Industries’ capital structure features 64 percent equity, 8 percent preferred stock, and 28 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.60 percent, 9.50 percent, and 9.00 percent,..

Shipping-installation costs of machine will be capitalized : KADS, Inc., has spent $470,000 on research to develop a new computer game. The firm is planning to spend $270,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $57..

Which type of bond would have the highest required return : Which type of bond is likely to have a price that remains fairly constant even if overall interest rates change? All else equal, which type of bond would have the highest required return? Who gets paid first if a company goes bankrupt?

Shares of stock outstanding selling : TAFKAP Industries has 3 million shares of stock outstanding selling at $15 per share, and an issue of $20 million in 8.5 percent annual coupon bonds with a maturity of 20 years, selling at 104 percent of par. Assume TAFKAP’s weighted average tax rate..

How much interest will you have earned after five years : Bank A pays 5% simple interest on its savings account balances while Bank B pays 4% interest compounded semi-annually. If you decide to save $10,000 in each bank, how much interest will you have earned after five years from each bank?

User Account

All Pages