Bulldogs Inc.’s capital structure consists entirely of long-term debt and common equity. The cost of capital for long-term debt is 5% while for Common equity is 10%. If Bulldogs Inc.’s weighted average cost of capital is 6.50%, what proportion of the company’s capital structure is in the form of long-term debt? Assume that the tax rate is 40%

Q: a firm has a target debt-equity ratio of 0.35. Its cost equity is 11 percent and its before tax cost…

A: The WACC of a company refers to the average profits that the company provides to all its…

Q: Quakers Inc. has a before-tax cost of debt of 4%, a cost of equity of 13%, and a cost of preferred…

A: To calculate the weighted average cost of capital (WACC) for Quakers Inc., we need to use the…

Q: Yellow Submarine, Co. has a cost of equity of 10.84 percent, a cost of debt of 5.47 percent, and a…

A: The Weighted Average Cost of Capital (WACC) is a pivotal financial metric representing a company's…

Q: The capital structure of Bulldogs Inc. is comprised of 50% ordinary stock, 25% preferred stock, and…

A: Formula: Weighted Average Cost of Capital = (Cost of Ordinary Stock X Weighted of Ordinary Stock) +…

Q: Munding Corp. has debt with a market value of $23 million and equity with a market value of $45…

A: weighted average cost of capital = [Ke x E / (E+D) ] + [ Kd x (1-t) x D / (E+D) ]WhereKe = cost of…

Q: Tool Manufacturing has an expected EBIT o 69,000 in perpetuity and a tax rate of 23 percent. The…

A: Modigliani-Miller Proposition I (MM Proposition I) is a fundamental concept in corporate finance,…

Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest…

A: Interest Payment is calculated on the debt part out of the total funds of the company. Net Income is…

Q: ford motor corporation's capital structure consists of 60% debt, 10% preferred stock, and 30% common…

A: Capital Ratio Cost Debt 60% 6.50% Preferred stock 10% 8.00% Common equity 30% 12.00%   Tax…

Q: Vienna Inc. currently has a capital structure that consists of 100% equity. The risk-free rate is…

A: Risk-free rate = 3%Market risk premium = 8%Current cost of equity  9%Tax rate = 30%New weight of…

Q: What is the company’s after-tax weighted average cost of capital if National Co. pays 25% taxes?…

A: Weight of long term liabilities (Wl) = 0.30 Weight of preferred stock (Wp) = 0.30 Weight of common…

Q: ABC company has a capital structure of $7.1 million and it is made up of $5.6 million in equity and…

A: WACC considers all the sources of finance with their respective weights

Q: overall cost of capital? :

A: Overall cost of capital = ( Percentage of debt * Cost of debt) + (Percentage of preferred stock *…

Q: The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 11…

A: Weighted average cost of capital (WACC) is a financial metric used to measure the average cost of…

Q: Blue Co. is funded only by debt and equity with a weighted average cost of capital at 20%. The debt…

A: Weighted average cost of capital (WACC) = 20% Debt ratio = Weight of debt (Wd) = 20% or 0.2 Weight…

Q: A company has a total return on capital before tax of 10%. The interest rate on debt is 4% and the…

A: The company first of debt which is said to be the weighted average cost of capital which consist of…

Q: Palo Verde, Inc., has found that its cost of equity is 17 percent, and its (before-tax) cost of debt…

A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…

Q: Sonova corporation has an operating income of $240000 and a 40% tax rate The firm has short term…

A: The operating profit (EBIT) is $240,000.The tax rate is 40%.The short term is $115,000 and long-term…

Q: o Coal Company has estimated the costs of debt and equity capital (with bankruptcy and agency costs)…

A: Weighted average cost of capital of the company is the weighted cost of debt and weighted cost of…

Q: CoffeeCarts has a cost of equity of 15%, has a pre-tax cost of debt of 4%, and is financed 70% with…

A: Given details are : Cost of Equity (Ke) = 15% Pre tax cost of debt (Kd) = 4% Weight of Equity = 70%…

Q: National Co.'s capital structure consists of 30% long-term liabilities, 30% preferred stock, and 40%…

A: Weighted average cost of capital is calculated as: = Sum of (Weights * Cost of instrument)

Q: Take it all away has a cost of equity of 10.84 percent, a pretax cost of debt of 5.47 percent, and a…

A: Given, Cost of equity = 10.84%. Cost of debt = 5.47%. Tax rate = 39%. Company's capital structure =…

Q: Apple’s debt-to-asset ratio is 35%. The before-tax cost of debt is 10% and the corporate tax rate is…

A: Debt to asset ratio = 35% Before tax cost of debt = 10% Tax rate = 45% WACC = 15%   Equity to asset…

Q: A company's after-tax cost of debt is 5.86 %, and its cost of retained earnings is 13.64%. If the…

A: > Given data:>After tax cost of debt = 5.86%> Cost of equity = 13.64%> Weight of equity…

Q: A company has 35% of its balance sheet as debt with a total amount of assets of EUR 17,000,000.If…

A: Weight of debt = 35% Weight of equity = 100% - 35% = 65%

Q: Using WACC, ignoring taxes, compute the cost of capital of a company with debt ratio of 0.75:1 and…

A: Debt ratio = 0.75 Equity ratio = 1-0.75 = 0.25 Debt cost = 4% Equity cost = 5%

Q: Idak Corp. has a pretax income of 21,000 and a 5% weighted-average cost of capital. Assets total…

A: Solution Economic value added = NOPAT - (WACC * capital invested)   Here NOPAT = Net operating…

Q: Majan Mining has found that its cost of common equity capital is 15 percent and its cost of debt…

A: The cost of capital is the cost that is incurred by a corporation on the acquisition of capital from…

Q: Company A is financed by 20% of debt and the rest of the company is financed by common equity. The…

A: Given: Debt (% of capital structure) 20% Before-tax cost of debt 5% Cost of equity 11%…

Q: The cost of capital is 15%, the before-tax cost of debt is 9%, and the mar-ginal income tax rate is…

A: The cost of capital is the cost of raising funds a firm has to bear. It is the weighted average cost…

Q: Take It All Away has a cost of equity of 11.14 percent, a pretax cost of debt of 5.34 percent, and a…

A: Step 1: The calculation of the weighted average cost of capital (WACC) AB1Cost of…

Q: Black Inc.'s capital structure consists entirely of long-term debt and common equity. The cost of…

A: Cost of long term debt = 5% Tax rate = 40% After tax cost of debt (RD) = 5%*(1-0.40)…

Q: Take It All Away has a cost of equity of 10.57 percent, a pretax cost of debt of 5.29 percent, and a…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: Spot Company’s balance sheet consists of the following: $790 million and $230 million. Its current…

A: Weighted average cost of capital is the average cost of using the finance by the company. Finances…

Q: TRU Inc. desires to maintain a capital structure of 90% equity and 10% debt. They currently have an…

A: Weighted average cost of capital: Weighted Average Cost of Capital (WACC) is a financial metric used…

Q: National Co.’s capital structure consists entirely of long-term liabilities and common equity. The…

A: WACC = (Ke*Wk) + (Kd*(1-t)*Wd) Where Ke  = Cost of equity Kd  = Cost of debt Wk = weight of equity…