ABC has a constant growth rate of 7%. The company retains 30% of its earnings to fund futu nc.'s expected earnings per share (EPS) and cost of equity for various capital structures are DEBT RATIO 20% COST OF EQUITY EXPECTED EP 15% 2.50 30% 15.50% 3.00 40% 16% 3.25 50% 17% 3.75

Can the yield on company traded bonds be used as an estimate for some, or all, of the company’s debt. If not, can credit spreads be obtained that can be used to estimate the cost of debt?

The WACC is a weighted average of the costs of debt, preferred stock, and common equity. How should the capital structure weights used to calculate the WACC be determined? Would the WACC depend in any way on the size of the capital budget? How might dividend policy affect WACC? Explain

What is WACC? Why do firms compute it? What happens to WACC when the debt level of a firm changes?

How do we use debt to equity ratio to evaluate business performance?

In what order will a firm pursue in acquiring internal, debt, and equity financing, if packing order theory holds?