What is the firm weighted average cost of capital

Assignment Help Financial Accounting
Reference no: EM132920501

Problem 1: The capital structure of an organisation consists of three items: debt, preference shares and ordinary shares. The before-tax cost of debt is 6.0%, the before-tax cost of preference shares is 8.2% and the before-tax cost of ordinary shares is 11.8%. The proportion of debt in the capital structure is 25%, the proportion of preference shares is 22% and the proportion of ordinary shares is 53%. The corporate tax rate is 30%. What is the firm's Weighted Average Cost of Capital (WACC)?

Reference no: EM132920501

Questions Cloud

Discuss the external and internal barriers : In Chapter 2, Dr. Ridel covers internal and external barriers that probably hindered you from developing strong critical thinking skills. These include family,
What are the economic and legal factors : What are the economic and legal factors to consider in the personal luxury market in Australia post COVID-19.. Your Employer also wants to know whether the indu
What is the required return on the share according to capm : What is the required return on this share, according to CAPM? Recycled Plastics Ltd is listed on the stock market and has a beta of 2.40.
Questions for competing for customers : These questions on are my introduction to business class and I don't understand Questions for "Competing for Customers"
What is the firm weighted average cost of capital : The proportion of ordinary shares is 53%. The corporate tax rate is 30%. What is the firm's Weighted Average Cost of Capital (WACC)?
What is tthe capitalization rate : Given the following information, what is tthe capitalization rate? (Enter your answer as a percentage WITHOUT the % symbol. For instance, enter 10.00 for 10.00%
Questions for the e-commerce website : Give answer the following questions for the following E-Commerce website:
How much income does david have to recognize : The regular price for the warranty to the customer is $150. As an employee, David only paid $100. How much income does David have to recognize?
Impact of e business solution on the knownledge economy : Question 2: you are setting up your own firm in mauritius . Propose the most appropriate E - business strategy and solution considering your time budget and ski

Reviews

Write a Review

Financial Accounting Questions & Answers

  Determine the maximum amount of personal tax credits

Determine the maximum amount of 2019 personal tax credits, including transfers from a spouse or dependant, that can be applied against federal Tax Payable

  What will be the addition to retained earnings at the end

What will be the addition to retained earnings at the end of 2021. What will be the ending balance in retained earnings at the end of 2021?

  Assuming that the liquidity preference theory

A two-year bond carries a 6% annual rate, while a three-year bond carries 9% annual rate. (a) What is the expected one-year rate for year 3, assuming the Expectations theory for the term structure of interest rates? (5 points) (b) What is the expecte..

  What amount should portfolio be valued on the balance sheet

At what amount should the portfolio be valued on the balance sheet and What amount, if any, should appear on the operating statement?

  Controllable variance

If productive capacity of 100% was 10,000 hours and the factory overhead cost budgeted at the level of 6,000 standard hours was $309,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total..

  Describe different risks and incentives that analysts face

Describe the different risks and incentives that analysts face and how these different risks and incentives lead to different biases when predicting uncertain o

  Determine the total amount of manufacturing overhead cost

For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. Deter..

  Total contribution margin is equal

Total contribution margin is equal to: A. total sales less fixed costs B. fixed costs plus profits C. Variable costs plus profits D. total sales less profits

  How much should contribute each month to retirement

How much should you contribute each month to your retirement fund, assuming your contributions start one month after your 25& birthday?

  Standard and flexible budgeting system

Baker Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead. Selected data for the June production activity follows:

  Record all of the applicable acquisition

Record all of the applicable acquisition - construction entries for each of these assets.

  Why would the expense recognition principle be important

Why, in your opinion, would the Expense Recognition Principle (aka Matching Principle) be important? What do you think the purpose of it is?

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