Q: Epsilon Corporation will be purchasing 2,000 shares of XYZ Corporation. Last year, annual dividends…
A: Dividend discount model It is used to calculate the value of a share. Under this model, the sum of…
Q: Reiterpallasch Inc. has provided you the following data: the company expects to pay a dividend of…
A: WACC(Weighted Avg. Cost of Capital) is average of cost involved in financing whole capital…
Q: Flaherty Electric has a capital structure that consists of 70 percent equity and 30 percent debt.…
A: Weighted average cost of capital is the average cost of raising funds from various sources by the…
Q: The GIN Corp. is expected to pay a dividend of S3 which is expected to grow at 2% for a foreseeable…
A: WACC is the overall average cost of the all finance sources. It is equal to sum of product of cost…
Q: 3. (a) Almond Corporation is expected to pay a RM2.50 dividend at year end (D, = RM2.50), the…
A: Weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…
Q: Currently, Gamora Corporation has a capital structure that consists of 50% equity and 50% debt. The…
A: Given, Cost of debt = 8% Weight of debt = 50% Weight of equity = 50% Tax rate = 30% Year end…
Q: A company finances its operations with 60 percent debt and the rest using equity. The annual yield…
A: Given: Debt (D) = 60% Equity (E) = 40% Cost of debt (rd) = 4.1% Cost of equity (re) = 12.4% Tax =…
Q: Alli Corporation has established a target capital structure of 40 percent debt and 60 percent common…
A: Any year’s profit earned by the company if not distributed to the shareholders is known as retained…
Q: Determine the company’s WACC
A: WACC: WACC (weighted average cost of capital) is the cost of capital of the firm. It is composed of…
Q: A firm's next year earnings are expected to be $4.00 per share, and the firm follows apractice of…
A: Expected dividend = Next year earnings * Dividend payout rate = 4 * 60% =2.4
Q: TGN Corporation generated FCF of $1,200,000 in the most recently completed year. FCF is expected to…
A: The free cash flow to the firm shows cash available to equity and debt provides after adjusting for…
Q: XYZ anticipates earning $1,800,000 and paying $300,000 in dividends this year. XYZ's capital…
A: equity break point=retained earningfraction of equity
Q: Serenity Systems Inc. is expected to pay a $2.50 dividend at year end (D, = $2.50), the dividend is…
A: The weighted average cost of capital is the weighted average of the cost of equity, cost of debt and…
Q: Oregano Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares…
A: A dividend is a payment made to shareholders by publicly traded firms, and it is derived from the…
Q: Arts and Crafts, Inc. will pay a dividend of $4 per share in 1 year. It sells at $50 a share, and…
A:
Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…
A: Weighted average cost of capital (WACC) of a firm is combination of cost for component of capital in…
Q: Alpha Moose Transporters has a current stock price of $33.35 per share, and is expected to pay a…
A: The minimum rate of return required to earn on equity capital without affecting the market value of…
Q: . HighGrowth Company has a stock price of $19. The firm will pay a dividend next year of $0.88, and…
A: Next dividend (D1) = 0.88 Current price (P0) = $19 Growth rate (G) = 4.1%
Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…
A: given, D1=$2.50g=5.50%p0=$40rd=7.50%tax = 40%wd=45%we=55%
Q: Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $8 billion in…
A: (1) It is assumed that face value of share is $ 10 Total Assets = 8 billions common equity = 8…
Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…
A: WACC is the average cost of capital which can be calculated the multiplying the weight of securities…
Q: Oranda Corp. has 1 million shares of stock outstanding. Oranda has a target capital structure with…
A: a) As per residual distribution policy dividend available for distribution = Net income - (Capital…
Q: Company D has 2 million shares of stock outstanding currently selling at $25 per share, and an issue…
A: Weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…
Q: Plato, Inc., expects to have net income of $5,000,000 during the next year. Plato’s target capital…
A: Residual dividend policy is the policy in which the earnings of the company are first used for the…
Q: An analyst is trying to estimate the intrinsic value of Blue Co. that has a weighted average cost of…
A: Cost of Capital = 10% Free Cash Flows: Year Free cash flow 1 3000 2 4000 3 5000…
Q: Mama Inc. utilizes the residual dividend model to determine its ordinary dividend payout. This year…
A: Introduction Under Residual dividend policy the amount of dividends paid to the shareholders amount…
Q: Pearl Corp. is expected to have an EBIT of $1,900,000 next year. Depreciation, the increase in net…
A: Given information: EBIT is $1,900,000 Depreciation is $160,000 Net working capital is $80,000…
Q: Now calculate the cost of common equity from retained earnings using the CAPM method Current…
A: The expected return is the minimum required rate of return which an investor required from the…
Q: Lily’s Show is expected to pay an annual dividend of RM0.80 a share next year. The market price of…
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: Blooming Ltd. currently has the following capital structure: Debt: S2,500,000 par value of…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: HighGrowth Company has a stock price of $22. The firm will pay a dividend next year of $0.97, and…
A: In this question we require to compute the cost of equity capital for HighGrowth. This question can…
Q: ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to…
A: Computation:
Q: Grateway, Inc., has a weighted average cost of capital of 11.5 percent. Its target capital structure…
A: Given: Pre tax cost of debt =9.00%Tax rate =30%Capital structure: Equity =55%Capital structure: Debt…
Q: HighGrowth Company has a stock price of $21. The firm will pay a dividend next year of $1.01, and…
A: Given: Stock Price(P0 )=$21Dividend paid next year (D1)=$1.01Expected growth rate of dividend…
Q: What is the cost of internal common equity (retained earnings) if the long-term growth in dividends…
A: The cost of retained earnings doesn't involve any explicit cost but involves the opportunity cost.…
Q: ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to…
A: WACC = (Ke * We) + (Kd * Wd) Ke = Cost of equity Kd = Cost of debt We = Weight of equity Wd = Weight…
Q: HighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and…
A: Stock price (P0) = $18 Next dividend (D1) = $1.15 Growth rate (g) = 3.5%
Q: Pimento Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares…
A: Given: Earnings = $75 million Shares outstanding = 12 Million Price = $27.50
Q: The Wei Corporation expects next year's net income to be $10 million. The firm is currently financed…
A: In residual distribution model, we distribute dividend from net income after retaining funds for…
Q: Munich Re Inc. is expected to pay a dividend of $4.82 in one year, which is expected to grow by 4% a…
A: The weighted average cost of capital or WACC is one of the important financial concepts that is used…
Q: Bulldogs Inc. has forecasted that its net income will be P520,000. The company has an debt-to-…
A: Under residual model, amount of dividend paid to common stockholders is the balance of Net Income…
Q: Pearl Corp. is expected to have an EBIT of $2,000,000 next year. Depreciation, the increase in net…
A: The question is based on the concept of discounting of free cash flow in the company operation. The…
Umbrella Corp is expected to pay a dividend at year end of D1 = $2.50. This dividend is expected to grow at a constant rate of 5.00% per year, and the common stock is currently valued at $71.00 per share. The before-tax cost of debt is 6.75%, and the tax rate is 40%. The target capital structure consists of 40% debt and 60% common equity. What is the company's WACC? (Ch. 10)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Sorenson Systems, Inc. is expected to pay a dividend of $3.30 at year end (D1), the dividend is expected to grow at a constant rate of 5.5% a year, and the common stock currently sells for $37.50 a share. The before-tax cost of debt is 7.5%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity is used from retained earnings?Your answer should be between 7.36 and 12.57, rounded to 2 decimal places, with no special characters.Sorensen Systems Inc. is expected to pay a $2.00 dividend at year end (D1 = $2.00), the dividend is expected to grow at a constant rate of 5.0% a year, and the common stock currently sells for $50.00 a share. The before-tax cost of debt is 6%, and the tax rate is 41%. The target capital structure consists of 40% debt and 60% common equity. What is the company’s WACC if all the equity used is from retained earnings?Reingaart Systems is expected to pay a $4.2 dividend at year end (D1 = $4.2), the dividend is expected to grow at a constant rate of 4.1% a year, and the common stock currently sells for $62 a share. The before-tax cost of debt is 8.4%, and the tax rate is 24%. The target capital structure consists of 75% debt and 25% common equity. What is the company's WACC if all equity is from retained earnings? 8.41% O 7.51% 8.11% O 7.81% O 8.71%
- Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $87.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from retained earnings? Do not round your intermediate calculations. a. 5.69% b. 7.35% c. 5.10% d. 7.13% e. 6.62%Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $87.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from retained earnings? Do not round your intermediate calculations.Sarensen Systems Inc. is expected to pay a dividend of $2.50 at year end (D), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $ 37.50 a share. The before -tax cost of debt is 7.50 %, and the tax rate is 40% . The target capital structure consists of 45% debt and 55% common equity.What is the company's WACC if all the equity used is from retained earnings?
- sorensen systems inc. is expected to pay a $2.50 dividend at year end (d1=$2.50), the dividend is expected to grow at a a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. the before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC?Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $40.00 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company’s WACC if all the equity used is from retained earnings? Do not round your intermediate calculations. Group of answer choices 8.49% 6.96% 6.79% 6.45% 9.42%ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. The before-tax cost of debt is 7.50% and the tax rate is 40%. The target capital structure consist of debt and 55% common equity. What is the companys WACC if all the equity used is from retained earnings?
- Munich Re Inc. is expected to pay a dividend of $4.82 in one year, which is expected to grow by 4% a year forever. The stock currently sells for $72 a share. The before-tax cost of debt is 6% and the tax rate is 34%. The target capital structure consists of 30% debt and 70% equity. What is the company's weighted average cost of capital?Ahmad Corporation is expected to pay a RM2.50 dividend at year end (D1 = RM2.50), the dividendis expected to grow at a constant rate of 5.50% a year, and the common stock currently sells forRM67.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capitalstructure consists of 45% debt and 55% common equity. What is the company’s weighted averagecost of capital (WACC) if all the equity used is from retained earnings?A company’s capital structure consists solely of debt and common equity. It can issue debt at 15% interest rate, and its common stock is expected to pay a $5 dividend per share next year. The stock’s price is currently $40; its dividend is expected to grow at a constant rate of 3 percent per year; its tax rate is 30 percent and its WACC is 14 percent. Calculate the after-tax cost of debt and the cost of common equity. What percentage of the company’s capital structure consists of common equity?
