What is the company cost of equity capital

Assignment Help Operation Management

Reference no: EM131117454

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 11%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.92%. What is the company's cost of equity capital? Round your answer to two decimal places.

Reference no: EM131117454

Questions Cloud

Determinant of interest rates : The real risk-free rate of interest is 3%. Inflation is expected to be 2% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury s..

How could this affect the value of the canadian dollar : how could this affect the value of the Canadian dollar against the U.S. dollar? How might this decline in Canada's interest rates possibly affect the value of the Canadian dollar against the Japanese yen?

Discuss difference between michigans budget and state budget : discuss two differences between Michigan's budget and your state budget in terms of budget process, financial reporting, and costs analysis (fixed costs, step-fixed costs, and variable costs). Justify your response with examples.

Program that lets the user perform arithmetic operations : Write a program that lets the user perform arithmetic operations on two numbers.

What is the company cost of equity capital : David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 11%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.92%. What is the comp..

Write a program to compute sinx : Write a program to compute sinx for given x. The user should supply x and a positive integer n.

Competition make the project results obsolete : Projects are supposed to succeed, not fail. However, termination is an option to consider when all but which one of the following conditions exist?

Discuss four governmental expenditures that you believe : From the first e-Activity, discuss four governmental expenditures that you believe will have a significant impact on your local economy over the next year. Justify your response with examples.

Identifying competitive advantage : When identifying competitive advantage, which characteristic of a strength or weakness (value, rareness, imitability, and sustainability) is the most important in health care organizations? Explain your answer.

User Account

All Pages