COST OF COMMON EQUITY AND WACC Patton Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P0 = $22.50. The last dividend was D0 = $2.00, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC?

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 $68 a share. The before-tax cost of debt is 9% and the tax rate is 34%. The target capital structure consists of 40% debt and 60% equity. 1. What is the company's weighted average cost of capital?

Lester's has expected earnings before interest and taxes of $57,800, an unlevered cost of capital of 10.2 percent, and debt with both a book and face value of $84,000. The debt has a coupon rate of 8.35 percent and the tax rate is 21 percent. What is the value of this company? $376,544 $596,973 $648,293 $456,666 O $389,304

Honda Inc. (HI) has the following capital structure, which it considers to be optimal: debt = 25%, preferred stock = 15%, and common stock = 60%. Honda Inc.’s tax rate is 40%, and investors expect earnings and dividends to grow at a constant rate of 6% in the future. Honda Inc. paid a dividend of $3.70 per share last year (D0), and its stock currently sells at a price of $60 per share. Ten-year Treasury bonds yield 6%, the market risk premium is 5%, and Honda Inc.’s beta is 1.3. The following terms would apply to new security offerings.   Preferred: New preferred could be sold to the public at a price of $100 per share, with a dividend of $9. Flotation costs of $5 per share would be incurred. Debt: Debt could be sold at an interest rate of 9%. Common: New common equity will be raised only by retaining earnings a. Find the component costs of debt, preferred stock, and common stock. b. What is the WACC?

Patton Paints Corporation has a market capital structure of 40% debt and 60% common stock (no preferred stock). The company’s before tax cost of debt is 9% and its marginal tax rate is 40%. The current stock price is Po = $22.50; the last dividend was Do = $2.00; and the dividend is expected to grow at a constant rate of 7%. What will be the firm’s WACC?

Pastel Interiors is currently an all-equity firm that has an annual projected BIT of $136,900. The current cost of equity is 16.5% and the tax rate is 20%. The firm is considering adding $118,000 of debt with a coupon rate of 7.5% to its capital structure. The debt will be sold at par value. What is the value of the unlevered firm (pre-debt)? A $763,570 B $663.758 C $730,133   (D) $696,945 ) $630,570

Annual after-tax cost of debt=10% and tax rate=30%. Risk-free rate=5% and market risk premium=8%. The company shares are 1,8 times more volatile than the market. Market price per share is $40 and the company has 12.500.000 outstanding shares. The market value of interest-bearing debt is estimated at $300.000.000. What is the weighted average cost of capital?   A) 7,31% B) 9,13% C) 10,25% D) 14,75% E) 15,88% F) OTHER: ____

Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 11%, and its marginal tax rate is 25%. The current stock price is Po= $34.00. The last dividend was Do = $2.25, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. Ts= WACC= % % 4

National Company expects P30,000,00 in earnings next year. Its dividend payout ratio is 40%, and its equity to asset ratio is 40%. National Company uses no preferred stock. At what amount of financing will there be a break point in National Company’s cost of capital?