X Corporation has total assets of P100 million. Earnings before interest and taxes were P20 million and the tax rate was 35%. Given are the following leverage ratios and corresponding interest rates. 1. 2. 3. 4. 5. Leverage (Debt / Total Assets) 0% 10 30 50 60 Interest Rate on Debt 16 % 16 18 21 Calculate Litton's rate of return on equity and WACC for each amount of debt. What is the optimal capital structure? If you were the finance manager, which capital structure would you choose? Justify.

A levered firm has a pretax cost of debt of 6.8 percent and an unlevered cost of capital of 14 percent. The tax rate is 21 percent and the cost of equity is 17.7 percent. What is the debt-to-equity ratio? O 0.65 0.47 0.41 O 0.52

Pls help correctly, I only need c part and correct with approach and explanation.

A company is considering its optimal capital structure. The firm currently has 1 million shares outstanding at $ 20 per share (tax rate = 40%) and a debt balance of $5 million. Currently, its (levered) beta is 1.5 and its ERP is 5.5%. The current risk-free rate is 5%. Your research indicate the following ratings and pre-tax cost of debt across the different debt ratios: D/(D+E) Rating Pre-tax cost of debt 0% AAA 10% 10% AA 10.5% 20% A 11% 30% BBB 12% 40% BB 13% 50% B 14% 60% CCC 16% 70% CC 18% 80% C 20% 90% D 25% a. Using the optimal WACC approach, what is the firm's optimal debt ratio? b. Calculate the company's unlevered value, assuming that the probability of default is 5% and the company loses 30% of its value in the event of a default.

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 40​% ​long-term debt, 15​% preferred​ stock, and 45​% common stock equity​ (retained earnings, new common​ stock, or​ both). The​ firm's tax rate is 26​%.   Debt The firm can sell for ​$1005 a 13​-year, $1,000​-par-value bond paying annual interest at a 6.00​% coupon rate. A flotation cost of 2.5​% of the par value is required.   Preferred stock  7.00​% (annual dividend) preferred stock having a par value of ​$100 can be sold for ​$98. An additional fee of ​$5 per share must be paid to the underwriters.   Common stock  The​ firm's common stock is currently selling for ​$80 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.50 ten years ago to the ​$4.92 dividend​ payment, D0​, that the company just recently made. If…

The Black Bird Company plans an expansion. The expansion is to be financed by selling $21 million in new debt and $57 million in new common stock. The before-tax required rate of return on debt is 9.77% percent and the required rate of return on equity is 13.11% percent. If the company is in the 34 percent tax bracket, what is the weighted average cost of capital?

Your company is financed 20% with riskless debt with a yield of 6% and 80% with equity with a cost of 14%. The corporate tax rate is 30%. a. What is the company's WACC at its existing capital structure? b. What would be the new WACC if it changes to being 40% debt financed?

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 35​% ​long-term debt, 20​% preferred​ stock, and 45​% common stock equity​ (retained earnings, new common​ stock, or​ both). The​ firm's tax rate is 21​%. Debt The firm can sell for ​$1030 a 13​-year, ​$1,000​-par-value bond paying annual interest at a 7.00​% coupon rate. A flotation cost of 2​% of the par value is required. Preferred stock 8.5​% ​(annual dividend) preferred stock having a par value of ​$100 can be sold for ​$90. An additional fee of ​$4 per share must be paid to the underwriters. Common stock The​ firm's common stock is currently selling for ​$60 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.75 ten years ago to the ​$5.41 dividend​ payment, D0​, that the company just recently made. If the…

A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity.Given the following information, calculate the firm's cost of capital (WACC).rd= 7%, Tax rate = 40%, P0 = $20, Growth = 0%, D0 =$2.00

a)  Calculate the after-tax cost of debt for each capital structure.