Upton Umbrellas has a cost of equity of 10.8 percent, the YTM on the company's bonds is 6.3 percent, and the tax rate is 21percent. The company's bonds sell for 103.6 percent of par. The debt has a book value of $420,000 and total assets have a bookvalue of $956,000. If the market-to-book ratio is 2.86 times, what is the company's WACC?7.92%O 9.51%O 7.80%O5.58%O 8.90%

The weighted average cost of capital measures the typical cost a business pays to finance its…

Answered: value of $956,000. If the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Upton Umbrellas has a cost of equity of 10.6 percent, the YTM on the company's bonds is 5.2 percent, and the tax rate is 22 percent. The company's bonds sell for 92.6 percent of par. The debt has a book value of $378,000 and total assets have a book value of $942,000. If the market-to-book ratio is 2.44 times, what is the company's WACC? Multiple Choice O 8.09% 5,38% 7.85% 8.68% D
Generous Corporation has a cost of equity of 10.8 percent, the YTM on the company's bonds is 6.3 percent, and the tax rate is 35 percent. The company's bonds sell for 103.6 percent of par. The debt has a book value of $420,000 and total assets have a book value of $956,000. If the market-to-book ratio of equity is 2.86 times, what is the company's WACC? 8.90% 780% 9.32% 792%
Upton Umbrellas has a cost of equity of 11.4 percent, the YTM on the company's bonds is 6 percent, and the tax rate is 21 percent. The company's bonds sell for 102.9 percent of par. The debt has a book value of $402.000 and total assets have a book value of $950,000. If the market-to-book ratio is 2.68 times, what is company's WACC? Multiple Choice 817% 9.94% 9.36% 5.55% Next
Skolits Corp. has a cost of equity of 11.8 percent and an aftertax cost of debt of 4.44 percent. The company's balance sheet lists long-term debt of $340,000 and equity of $600,000. The company's bonds sell for 104.1 percent of par and market-to-book ratio is 2.80 times. If the company's tax rate is 39 percent, what is the WACC?
Skolits Corporation has a cost of equity of 11.2 percent and an aftertax cost of debt of 4.62 percent. The company's balance sheet lists long-term debt of $370, 000 and equity of $630,000. The company's bonds sell for 105.3 percent of par and the market - to - book ratio is 2.98 times. If the company's tax rate is 25 percent, what is the WACC?
Tokyu Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 8 percent and its tax rate is 25 percent. Its cost of equity is 15 percent. What is the company's Debt/Total Assets Ratio?
Tomeco Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 6 percent, and its tax rate is 30 percent. Its cost of equity is 14 percent. What is Tomeco’s Equity/Total Assets ratio?
The Two Dollar Store has a cost of equity of 12.3 percent, the YTM on the company's bonds is 5.8 percent, and the tax rate is 39 percent. If the company's debt–equity ratio is .58, what is the weighted average cost of capital?
Sunshine Inc. has a WACC of 10.9 percent. The company's cost of equity is 12 percent, and its cost of debt is 8.9 percent. The tax rate is 38 percent. What is the company's debt-to-equity ratio?
The Lawrence Company has a ratio of long term debt to long term debt plus equity of .39 and a current ratio of 1.7. Current liabilities are 950, sales are 6370, profit margin is 9.8 percent, and ROE is 20 percent. What is the amount of the firms net fixed assets?
Benjamin Manufacturing has a target debt-equity ratio of .45. Its WACC is 11.2%, and its cost of debt is 9 percent. What is the cost of equity if the tax rate is 20%?
Take it all away has a cost of equity of 10.84 percent, a pretax cost of debt of 5.47 percent, and a tax rate of 39 percent. The company's captial structure consists of 76 percent debt on a book value basis, but debt is 38 percent of the company's value on a market value basis. What is the company's WACC

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value of $956,000. If the market-to-book ratio is 2.86 times, what is the company's WACC? O 7.92% O 9.51% O 7.80 % O 5.58% O 8.90%