Before-tax cost of equity-debt and equity weight

Assignment Help Financial Management

Reference no: EM13939421

Johnny Cake Ltd. has 8 million share of stock outstanding selling at $22 per share and an issue of $40 million in 10 percent annual coupon bonds with an maturity of 17 years selling at 94.0 percent of per. Assume Johnny Cake's weighted-average tax rate is 34 percent, its next dividend is expected to be $3 per share and all future dividends are expected to grow at 5 percent per year, indefinitely.

What is its WACC? (Do not round intermediate calculations and round your final answer to round 2 decimal places.)

Before-tax cost of equity

Before-tax cost of debt

Equity weight

Debt weight

WACC

Reference no: EM13939421

Questions Cloud

Understanding the principles of effective communication : In this assessment students will be required to demonstrate their understanding of the principles of effective communication.

Defined as the incremental profit dividend by the investment : Schweser Satellites Inc produces satellite earth stations that sell for $100,000 each. The firm's fixed costs, F, are $2 million. 50 earth stations are produced and sold each year, profits total $500,000 and the firms assets (all equity financed) are..

Prepare a schedule of cash flows for the proposed project : Prepare a schedule of cash flows for the proposed project. Assume that there are no income taxes. Assuming that Uintah's cost of capital is 12 percent, compute the project's NPV. Should the product be produced?

Before-tax cost of equity-debt and equity weight : Johnny Cake Ltd. has 8 million share of stock outstanding selling at $22 per share and an issue of $40 million in 10 percent annual coupon bonds with an maturity of 17 years selling at 94.0 percent of per. Assume Johnny Cake's weighted-average tax ra..

Main types of actions involve databases : What four main types of actions involve databases? Briefly discuss each. What are the responsibilities of the DBA and the database designers? What is the difference between a database schema and a database state?

Explain the limitations of providing personal information : Provide examples of how the selected program assisted in solving crimes. Explain the limitations of providing personal or confidential information, and address the restrictions on the Freedom of Information Act (FOIA)

Dealing with the rapid increase in illness : You may have read that President Obama declared a "National Emergency" over the weekend to deal with the "rapid increase in illness" from the H1N1 influenza virus.

Lowest possible profit from the combined investment : An investor purchases a stock for $65 and writes a call option on the same stock with an exercise price of $70 for a premium of $4 per share. The call option expires in one year. What is the maximum profit the investor can earn on the combined “cover..

User Account

All Pages