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The book value of Debt is $600M and the book value of Equity is $1,400M. The company's stock is currently trading at $4 per share and there are 1M shares outstanding. The tax rate is 30% What is the % of Debt in the Capital Structure?
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- A company has debt, equity share and overdraft financing. The overdraft is used to finance the day-to-day activities of the company when necessary. The after-tax cost of debt is 12%, the cost of equity is 20% and the after-tax cost of the overdraft is 18%. The market value of debt is R1 000 000, the market value of equity is R2 000 000 and the market value of the overdraft is R500 000. Calculate the company’s weighted average cost of capital (rounded to two decimal places). a. 18.33% b. 17.33% c. 18.43% d. 19.33% e. 17.43%Here is Icknield’s market-value balance sheet (figures in $ millions): Net working capital $550 Debt $800 long term assets $2,150 Equity $1,900 value of firm $2,700 $2,700 The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 21%. Investors expect this level of debt to be permanent. a. What is Icknield’s WACC? b. How would the market-value balance sheet change if Icknield retired all its debt?Consider a company that has issued $8 million in debt, pays a 6% interest rate on this debt and pays a 30% tax rate. The dollar amount of interest paid on the debt is Select one: $480,000 $2,400,000 $8,000,000 $144,000
- Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00% Cost of equity is 10.00% Company pays tax at 35% a) 7.60% b) 8.40% c) 9.33% d) 9.00%Assume a company has 10mm outstanding shares of stock that currently trade at $50 per share. Assume the company cost of equity is 18% and its after-tax cost of debt is 6%. Assume the company has $250mm in long term debt and $50mm of other liabilities. What is the WACC?
- The board of directors of LuvMe Publishing Haus has commissioned a capital structure study. The company has a total assets of P59 million. It has earnings before interest and taxes (EBIT) of P9.0 million and is taxed at 25%. The stock has a book value of P25 per share. Additional information follows: Percentage of Debt Cost of Debt Required Rate of Return 0% 0% 10.0% 20% 8.5% 10.9% 30% 9.5% 11.5% 60% 15.0% 16.5% Based on the above information using the debt ratio given, prepare the schedule to answer the following: Earnings per share (EPS) Return on Equity (ROE) Price - Earnings ratioA company finances its operations with 57 percent debt and the rest using equity. The annual yield on the company's debt is 6% and the required rate of return on the stock is 14.6%. What is company's WACC? Assume the tax rate is 30%Intro Munding Corp. has debt with a market value of $23 million and equity with a market value of $57 million. Its pre-tax cost of debt is 5% and its cost of equity is 11%. The firm's marginal tax rate is 21%. Part 1 What is the company's weighted average cost of capital? 3+ decimals Submit
- 9. The Patrick Company's cost of common equity (rs) is 16%, its before-tax cost of debt (ra) is 8%, and its marginal tax rate is 20%. The stock sells at $41 per share and bonds sell at $900 per bond. Assets Cash Account Receivable Inventories $100,000 $300,000 $400,000 Liabilities and Equity Long-term debt (par value-$1000) $2,000,000 Common stock (par value=$1) $200,000 Retained earnings $2,800,000 Plant and equipment, net $4,200,000 Total assets $ 5,000,000 Total liabilities and equity What is Patrick's WACC if it raises capital based on market value capital structure? a. 12.16% $5,000,000 b. 14.56% c. 14.27% d. 12.80% e. 13.88%1. The company A has 10 million shares of common stock outstanding. The stock currently trades at $4.85 per share. The company also issues 10 million debt with 7% interest rate and will be repaid in next two years. The firm can also obtain debt with the same interest rate in the future. Company A’s weighted average cost of capital is 10.5 percent. The tax rate is 35 percent.a. Construct company A’s market value balance sheetb. What is the company’s cost of equity capital?c. What is the company’s unlevered cost of equity capital?d. Company A is thinking to invest on a project cost $5 million. Should the company choose debt financing or equity financing assume the financial distress cost is zero? How about if the financial distress cost is not zero?PROBLEM A. A. ABC Corp., expects a net income of Php. 250,000. The company has 10% of 5,000,000 Debentures. The equity capitalization rate of the company is 10%. 1. Calculate the value of the firm and overall capitalization rate according to the net income approach (ignoring income tax). 2. If the debenture debt is increased to Php. 750,000 and interest of debt is change to 8%. What is the value of the firm and overall capitalization rate? B. Yuki's projected net operating income of Php. 85,000. It has Php. 3,00,000, 5% debentures. 1. Calculate the value of the firm according to 10 net opening income and overall capitalization rate is 10%. 2. If debenture debt is increased to Php. 100,000. What is the value of the firm and the equity capitalization rate?