The cost of debt and equity

Assignment Help Financial Management
Reference no: EM13814052

Calculate a firm’s WACC given that the firm has $600,000 of debt and $1,400,000 of equity. The cost of debt and equity is 10% and 15%, respectively, and the firm pays no taxes.

Reference no: EM13814052

Questions Cloud

Performing a hypothesis test : When performing a hypothesis test, you must make an assumption inorder to perform it. Assume that the hypothesis you are testing (the nullhypothesis) is true. This assumption allows you to calculate the probability ofthe test results. You then use th..
Future value if the interest rate is a simple interest rate : Find the future value of $10,000 invested now after five years if the annual interest rate is 8 percent. What would be the future value if the interest rate is a simple interest rate? What would be the future value if the interest rate is a compound ..
Common equity if the respective costs for these components : What is the WACC for a firm with 20% debt, 10% preferred stock, and 70% common equity if the respective costs for these components are 8% before the cost of debt, 12% before tax costs of preferred stock, and 18% before tact cost of common equity? The..
What is the payout ratio : A company has dividend of $2 per share, earnings per share of $8 and plowback ratio of 75%. What is the payout ratio?
The cost of debt and equity : Calculate a firm’s WACC given that the firm has $600,000 of debt and $1,400,000 of equity. The cost of debt and equity is 10% and 15%, respectively, and the firm pays no taxes.
Selected from an underlying normal distribution : In a sample of n = 15 selected from an underlying normal distribution, we obtain standard deviation s =10. Test the null hypothesis that the population standard deviation σ = 16.
The typical number of miles the car should have : Suppose you are in the market to purchase a used car. To make an informed decision regarding your purchase, you would like to collect as much information as possible. Among the information you might consider are the typical price of the car, the typi..
What is the accounting break-even in units : A manufacture contemplates a change in technology that has fixes costs of $600,000, and depreciation expense of $100,000 (depreciation calculated as $1,000,000 of machinery, depreciated straight-line over 10 years is $100,000 per year (depreciation e..
What is the amount of the operating cash flow for a firm : What is the amount of the operating cash flow for a firm with revenues of $1,000,000; expenses of 400,000; depreciation expense of $100,000; and a 35% marginal tax rate?

Reviews

Write a Review

Financial Management Questions & Answers

  Management greed come influence budget decisions

Is it important for a company to follow a strict budget even though they may be experiencing phenomenal profits? Do you think there will a bias towards greed when creating the budget for this company? Explain. How does management greed come influence..

  What will be the initial dilution in earnings per share

Columbia Corporation expects earnings of $8,000,000 in the current year on 6,000,000 shares of common stock. The company is considering the effects on reported earnings of issuing an additional 2,000,000 shares of common stock. What will be the initi..

  What are the monthly payments

Someone leases a car with the following terms: monthly payment, five year term, 5% annual interest rate, initial value of the lease is $35,000, and value at the end of the lease is $10,000. What are the monthly payments?

  What is the amount of the after-tax annual interest payment

The June Bug has a $16,000,000 bond issue outstanding. These bonds have a 7 percent coupon, pay interest semi annually in perpetuity, and have a current market price equal to 98.6 percent of face value. The tax rate is 39 percent. What is the amount ..

  Inventory turnover ratio and days sales in inventory

Sorenson Inc. has sales of $5,712,000, a gross profit margin of 27.45 percent, and inventory of $937,000. What are the company’s inventory turnover ratio and days’ sales in inventory?

  Compute the yield to maturity one expects

Ryan Inc is expected to have its growth rate drop from 20% to 10% in 5 years. The last dividend was $3 and the discount rate is based on beta of 3, T bond rate of 5% and return of the market of 10%. First, find the value of Ryan Inc. Second, compute ..

  Find the annual withdrawal

Find the Annual withdrawal

  Calculate the cost of capital for rio tinto

Calculate the cost of capital for Rio Tinto and state two reasons for why it may have declined since the GFC. Justify your answers using theory, calculations and research into current events.

  Down payment-bonuses and discount rate

You will receive 2,500 in bonuses each year for the next three years (at the end of each year). You are hoping to use these bonuses for a car down payment in about ten years. At a 7.79% discount rate, how much will you have saved? (Round to two decim..

  Calculate the npv of the order

The Branding Iron Company sells its irons for $50 a piece wholesale. Production cost is $40 per iron. There is a 25% chance that wholesaler Q will go bankrupt within the next year. Q orders 1000 irons and asks for six months' credit. Assume that the ..

  Compounded annually

If you invest $10,000 at 10% interest (compounded annually), how much will you have in 10 years? Round your answer to the nearest dollar.

  Calculate cost of debt-cost of new common stock

Vosberg, Inc wants to calculate the component costs in its capital structure. Common stock currently sells for $33, and is expected to pay a dividend of $.40. Vosberg's dividend growth rate is 8%, and flotation cost is $1.25. Calculate cost of debt, ..

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