The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital of the rale at which the compary pays taxes. The firm wishes to maintain a capital structure of40%debt,10%preferred stock,and50%common stock. The cost of financing with retaked eamings is18%, the cost of prefered stock finaneing is 9%, and the before-tax cost of debt financing is7%. Calculate the weighted average cost of capial (WACC) given a tax rate of 35%. The firmis WACC is ?%. (Round to two docinal places)

Sport Fishing Expeditions has a debt-equity ratio of 0.80. The pre-tax cost of debt is 7% and the required return on assets is 15%. What is the cost of equity if we factor in the firm's tax rate of 23%? 20.53% B 19.93% 18.91% 21.12% E 21.72%

B.F. Pierce & Company is considering changing its capital structure. The company currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: 8.66% 9.21% 8.83% Market Debt-to- Value Ratio 9.07% (WD) 0.00 0.20 0.40 0.60 0.80 Market Equity-to- Value Ratio (WE) 1.00 0.80 0.60 0.40 0.20 Market Debt-to- Equity Ratio (D/E) 0.00 0.25 0.67 1.50 4.00 Before-Tax Cost of Debt (rD) 5.00% The company uses the CAPM to estimate its cost of common equity. Currently the risk-free rate is 4%, the market risk premium is 6%, and the company's tax rate is 25%. The company estimates that its beta now (which is unlevered because it currently has no debt) is 0.8. Based on this information, what is the firm's weighted average cost of capital at its optimal capital structure? 6.00% 7.00% 8.00% 9.00%

A company currently has a WACC of 10.6 percent and no debt. The tax rate is 21 percent. a. What is the company’s current cost of equity? b. If the firm converts to 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC? c. If the firm converts to 60 percent debt with a cost of 6% , what will its cost of equity be? And the WACC? d. What can you conclude from the values of the cost of equity and WACC obtained in b. and c. Please show excel formulas