Weighted average cost of capital

Assignment Help Business Management
Reference no: EM131761271

Jones company has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity. The companys after tax cost of debt is 7%, its cost of preferred debt is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?

Reference no: EM131761271

Questions Cloud

Calculate the worst-case npv : Calculate the best-case NPV. (Do not round your intermediate calculations.)
Consideration to the turbulent first decade : The percent of sales method is based on historical information. Giving consideration to the turbulent first decade of this century with wars
What is the main objective of financial statements : 1.1 Define Accounting? 1.2 What is the main objective of financial statements? 1.3 Name the two main underlying assumptions of accounting?
Three annual cash flows : Project A with three annual cash flows of $900; or Project B with 3 three annual cash flows of $1,000?
Weighted average cost of capital : What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?
Prepare a multiple-step income statement : Prepare a multiple-step income statement, common stock outstanding and net income per share
Performance appraisal method : Which Performance Appraisal Method Is Best
Equivalent annual cost for a project : What is the equivalent annual cost for a project that requires a $30,000 investment at time zero, and a $10,000 annual expense during each of the next 4 years
What i see as the biggest challenges young adults face today : Why banning the use of cell phones while driving should be mandatory nationwide. What I see as the biggest challenges young adults face today?

Reviews

Write a Review

Business Management Questions & Answers

  Importance of communication and information exchange

Show the importance of communication and information exchange to project success and explain what are the crucial features and elements of effective communication and information exchange in successful projects?

  What is the goal of the film triumph of the will

What do you believe are the director's motives and what is the message he/she is sending?

  Explain the problem with the way team members interact

What is the biggest problem with the way these team members interact? What could they do to remedy the problem? Explain. Do you think Carly should continue to serve as Project Manager? Explain.

  Ethical dimension-outsourcing cool

The Apple iPhone 5 is an undeniable success, as were the prior versions. A "game changer," the iPhone has taken the lowly simple cell phone to a whole new level by offering a wide range of features (digital music player, Internet surfing, PDA, e-m..

  It must be present a scholarly discussion of a legal concept

It must be present a scholarly discussion of a legal concept that goals and structure of the business environment

  Write a sales letter using monroe''s motivates sequence

In a paragraph following the letter, explain your approach in terms of word choice, audience focus, addressing potential opposition to your product, and your appeals.

  What is restraint of trade

What is Restraint of Trade, Federal Trade Commission, Sherman Antitrust Act, and Risk Management?

  Prepare a presentation for the chamber of commerce

Prepare a presentation for the Chamber of Commerce of an area of your choice and Purpose: To give business leaders an idea of what the economy may look like based on recent history and expected future conditions

  Describe the methods for conflict resolution

Describing methods for conflict resolution. Differentiating common organizational structures and how they affect project processes and activities.

  Provide an introduction and context for the issue-challenge

Advocate a particular policy choice and provide rationale. Provide an introduction and context for the issue / challenge.

  Construct a sensitivity graph to illustrate the situation

Construct a table and a graph that illustrate how the number of years they must wait depends on the amount they save each year.

  Case study of bell company

Bell Company, a manufacturer of audio systems, started its production in October 2014. For the preceding 3 years, Bell had been a retailer of audio systems. Assuming that Bell manufactures, on average, 1,529 audio systems per month, enter each cos..

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