The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 11 percent, and its - before tax borrowing rate is 8 percent. Given a marginal tax rate of 30 percent. the weighted - average cost of capital answer is 8.84; I need the cost of equity
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- The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 percent, and its before-tax borrowing rate is 10 percent. Given a marginal tax rate of 35 percent. Required: a. Calculate the weighted-average cost of capital. b. Calculate the cost of equity for an equivalent all-equity financed firm. Complete this question by entering your answers in the tabs below. Required A dA Required B Calculate the weighted-average cost of capital. Note: Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places. Weighted-average cost of capitalThe Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 percent, and its before-tax borrowing rate is 8 percent. Given a marginal tax rate of 30 percent. Required: a. Calculate the weighted-average cost of capital. b. Calculate the cost of equity for an equivalent all-equity financed firm.Elliott’s Cross Country Transportation Services has a capital structure with 25% debt at a 9% interest rate. Its beta is 1.6, the risk-free rate is 4%, and the market risk premium is 7%. Elliott’s combined federal-plus-state tax rate is 25%. a. What is Elliott’s cost of equity? b. What is its weighted average cost of capital? c. What is its unlevered cost of equity?
- The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 11 percent and its before-tax borrowing rate is 9 percent. Given a marginal tax rate of 30 percent. a. Calculate the weighted-average cost of capital. (Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places.)Archimedes Levers is financed by a mixture of debt and equity. You have the followinginformation about its cost of capital:rE =__, rD = 12%, rA = __,Beta(E) = 1.5, Beta(D) =__, Beta(A) = __,rf = 10%, rm = 18%, D/V = .5Can you fill in the blanks?The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 10 percent and its before-tax borrowing rate is 8 percent. Given a marginal tax rate of 35 percent. Calculate the weighted-average cost of capital. (Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places.) Calculate the cost of equity for an equivalent all-equity financed firm. (Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places.)
- Archimedes Levers is financed by a mixture of debt and equity. You have the followinginformation about its cost of capital:rE =__, rD = 12%, rA = __,Beta(E) = 1.5, Beta(D) =__, Beta(A) = __,rf = 10%, rm = 18%, D/V = .5Can you fill in the blanks? Suppose now that Archimedes repurchases debt and issuesequity so that D / V = .3. The reduced borrowing causes r D to fall to 11%. How do theother variables change?The Kanucks Ltd wants to have a weighted average cost of capital of 11 .25%. The firm has an after-tax cost of debt of 5% and a cost of equity of 13 %. What debt-equity ratio is needed for the firm to achieve the targeted weighted average cost of capital? Multiple Choice0.250.220.280.330.42Suppose Dexter, Inc.'s target capital structure is as follows:wd = 0.45, wps = 0.05, and wee = 0.50Its before-tax cost of debt is 8%, its cost of equity is 12%, its cost of preferred stock is8.4%, and its marginal tax rate is 40%. Calculate Dexter's WACC. Here, w d = percentage of debt in the capital structurewps = percentage of preferred stock in the capital structurewee= percentage of common stock in the capital structure
- What proportion of a firm is equity financed if the WACC is 14%, the after-tax cost of debt is 7.0%, the tax rate is 35%, and the required return on equity is 17%? (Answer as a whole percentage, i.e. 5.25%, not 0.0525)8.4 Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Debt (%) After-Tax Cost of Debt (%) Cost of Equity (%) 0 — 16.0 20 6.6 17.0 40 7.8 19.0 60 10.2 22.0 80 14.0 27.0 What is the firm’s optimal capital structure? (Hint: Calculate its corporate cost of capital at each structure. Also, note that data on component costs at alternative capital structures are not reliable in real-world situations)The firm gets one-half of its capital from stock, and the other half from bonds. The debtholder’s required rate of return is 5%, the equity holder’s required rate of return is 10% and the firm’s tax rate is 2%. What is the weighted average cost of capital (WACC)? [Select the best answer, please.] 7.0 % 7.5 % 9.0 % 9.5 % 10.0 %