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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The cost of capital of a company that uses 45 percent debt that has an after-tax cost of debt of 10 percent and 55 percent equity that has a cost of 15 percent is:
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- Assume a capital structure where stock is 50% and costs 14%, bonds are 40% and cost 8% and preferred is 10% and costs 11% what is the weighted average cost of capital when taxes are 25%___________?arrow_forwardThe Alenso corporation's target capital stucture is 50% debt and 50% common equity. The cost of common equity id 13%, the before tax cost of debt is 9%, and the tax rate is 34%. what is WCC of Alenso corporation?arrow_forwardIf the return on asset (ROA) is 10%, the pre-tax cost of debt is 8%, and the corporate tax rate is 20%. What will the return on equity (ROE) be if the capital structure is 60% equity and 40% debt? Group of answer choices 10% 13.6% 9% 12.4%arrow_forward
- Genie Company has operating income after taxes of P50,000. It has P200,000 of equity capital, which has an after-tax weighted-average cost of 12%. Genie also has P10,000 of current liabilities (noninterest-bearing) and no long-term liabilities. What is the company's economic value added (EVA) for the period?arrow_forwardThe capital structure of ABC Company is: Debt 40%. Equity 60%. The cost of debt is 13%. The cost of equity is 16.5%. What is the weighted average cost of capital for ABC Company? Show your calculationsarrow_forwardSuppose that TapDance, Inc.’s capital structure features 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 14 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance’s WACC? (Round your answer to 2 decimal places.)arrow_forward
- Juni Corporation has a target capital structure that consists of 40% debt and 60% equity. Juni can borrow at an interest rate of 10%. Also, Juni has determined its cost of equity to be 14%. Juni’s tax rate is 40%. Calculate Juni’s weighted average cost of capital.arrow_forwardSuppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)arrow_forwardCompany A unlevered value is $100 million. The tax rate is 30%. The debt cost ofcapital is 3% and the asset cost of capital is 6%.i. What is company A’s value if debt/assets is raised to 25% after aleveraged recapitalization. Assume debt is permanent.arrow_forward
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