Total Value of Common Stocks (CS) Total Value of Preferred Stocks (PS) Total Value of Debt (D) O 19.79% O 14.97% 26.94% Cost of Equity $800,000 (common stocks) O none of the answers is correct 16.17% $200,000 Cost of Preferred stock Pre-tax Cost of Debt $400,000 Tax rate (t) 0.23 0.1 0.08 0.3
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- Calculate WACC given the following information. Total Value of Common Stocks (CS) $800,000 Total Value of Preferred Stocks (PS) $100,000 Cost of Preferred stock Total Value of Debt (D) $400,000 Pre-tax Cost of Debt Tax rate (t) Cost of Equity (common stocks) 0.17 0.11 0.09 0.4If the cost of debt for Sohar Textiles is 8.9% (effective rate) and the after-tax cost of debt is 0.066, what is the tax rate? Select one: a. 0.258 b. 0.023 c. 1.742 d. 0.155 e. All the given choices are not corre The difference between current assets and current liabilities of a business concern is termed as Select one: a. Preferred stocks b. Loans c. None of the options d. Working capital e. BondsThe following data pertains to Xena Corp. Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity: Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64 A. Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital: B. Using the information from the table, determine the weight on equity capital that should be used to calculate Xena's weighted-average cost of capital.
- The following data pertains to Xena Corp. Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity: Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64 A. Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's cost of equity capital, using the capital asset pricing model: B. Using the information from the table, determine the weight on debt capital that should be used to calculate Xena's weighted-average cost of capital.Calculate the market to book ratio ,debt equity ratio and retained income for the year. whats wrong with my answers kindly Answer 1. Market to book ratio = Market capitalisation/ Net book value = 243,000,000/1,750,000 = 138.85 Market capitalisation = MPS x No. of shares = 270 x 900,000 = 243,000,000 As the original cost of assets and depreciation is not given, we can assume that non-current assets as the net book value. Step 2 2. Debt/equity ratio = (Short term debt+Long term debt)/Shareholder's fund = (730,000+180,000)/(1,800,000+160,000) Debt-equity ratio = 910,000/1,960,000 = 0.464 Short term debt is payables in the ques, long term debt is the loan amount in the ques, and shareholders' fund = Share capital + Retained earnings Debt equity is less than 1 which means that it is a low levered company i.e. it has a low level of debt in comparison to equity. 3. Retained earning is given = 160,000Use the following data for the Sara Company to calculate the cost of common stocks (Rs), the cost of Preferred stocks (Rps), and the cost of Debt: (Rd)? Item Symbol Value Risk Free Rate Rf 7% Stock Risk B 1.5 Market Return Rm 25% Interest Rate for Debt Rd (B.T) 9% TAX rate T 5% Preferred Stock Dividend D(ps) 10 Preferred Stock Price P(ps) 100 floatation cost ps FC $4 The cost of Preferred stocks: (Rps)? The cost of Debt: (Rd)?
- Stock price Shares outstanding (millions) Mkt value Debt (millions) Capitalization (book value) Debt Equity Beta Target D/E Cost of debt Market Info Risk-free rate Comparable Company 10 1,000 10,000 20.00% 80.00% 1.40 n/a 6.50% 4.00% Market Risk Premium 5.00% Company A n/a n/a n/a 25.00% 75.00% n/a 0.80 5.00% Required: Use the relevant Comparable Company and Company A to calculate the WACC for Company A Assume the tax rate for both companies is 30%.Use the following data for the Sara Company to calculate the cost of common stocks (Rs), the cost of Preferred stocks (Rps), and the cost of Debt: (Rd)? Item Symbol Value Risk Free Rate Rf 7% Stock Risk B 1.5 Market Return Rm 25% Interest Rate for Deb Rd (B.T) 9% TAX rate T 5% Preferred Stock Dividend D(ps) 10 Preferred Stock Price P(ps) 100 floatation cost ps FC $4 Answer: The cost of common stocks: (Rs)Cost of Equity Debt ROC Capital ($ million) ($ million) (4) (8) Acme 250 125 178 Арех 1,250 417 15% 10 a-1. Calculate the economic value added for Acme and Apex. (Enter your answers In mllons rounded to 2 decimal places.) Economic value added for Acme Economic value added for Apex million million a-2. Which firm has the higher economic value added? O Acme O Apex b-1. Calculate the economic value added per dollar of Invested capital for Acme and Apex. (Round your answers to 2 decimal places.) Economic value added for Acme per dollar Economic value added for Apex per dollar
- Why do you deduct or subtract 1 to flotation cost? Example: Given; Annual dividend (D) = $4.75 Flotation cost (F) = 0.05 or 5% Number of shares issued (N) = 10,000 Stock price (P0) = $50 Formula; Total value able to receive = N * P0 * (1 - F) Total value able to receive = 10,000 * $50 * (1 - 0.05) Total value able to receive = $500,000 * 0.95 Total value able to receive = $475,000Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.20% Common Equity: Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64 Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital:The company capital structure consists of debt 250000 at 0.076, preferred stock 230000 at 11% and common stock 120000 at 14%, calculate company's weighted average cost of capital Select one: O a. 0.0737 O b. All the given choices are not correct O c. 0.0316 O d. 0.0596 O e. 0.1017
