Solution-Calculate question using the inputs provided

Calculate question using the inputs provided

Assignment Help Finance Basics

Reference no: EM133118288

A company has a cost of capital (WACC) equal to 10%. The cost of equity is 12%, the cost of debt is 6.5%, the tax rate is 20%, and debt represents 30% of the value of the firm (D/V = 30%).

Suppose the company reduces D/V to 20% by issuing new equity and paying down some of its debt. Suppose also that the the M&M (Modigliani and Miller) result is correct. If the cost of debt is still 6.5%, then the cost of equity will be __________.

WACC	10%
COE	12%
COD	6.50%
Tax Rate	20%
Debt Representation	30%
New Debt Rep	20%
New COD	6.50%
New COE	?

Please show what the excel formula would be to calculate this question using the inputs provided.

Reference no: EM133118288

Questions Cloud

Required return on equity : Your company's required return on debt is 6%, its tax rate is 30%, and its required return on equity is 10%. The company has 20 billion dollars of debt, and boo

Responsible for actually producing products : Discuss who will be responsible for actually producing the products or services in your organization.

How much must be raised through common stock : Zue Corporation has 60% of its capital structure in the form of equity capital. How much must be raised through common stock to maintain capital structure

Business monitoring and evaluation report : Business Performance Monitoring Outline for Business Monitoring and Evaluation Report - address a balance of both financial and non-financial information

Calculate question using the inputs provided : A company has a cost of capital (WACC) equal to 10%. The cost of equity is 12%, the cost of debt is 6.5%, the tax rate is 20%, and debt represents 30% of the va

Community health care system : Write a SBAR proposal for the new or improved health care service that you want to introduce into the community's health care system.

Discuss potential marketing strategies : Discuss potential marketing strategies for existing residential services, as well as commercial and environmentally friendly cleaning services

Calculate the present value of the payments : Jack will receive $2000 every two years from a fund. He will receive 10 payments in total with the ?rst payment being paid 5 years from new. Given that the nomi

Hiring for the position and quality and performance : What if a qualified candidate is disabled? How might diversity of the staff add to better performance?

User Account

All Pages

Calculate question using the inputs provided

Reference no: EM133118288

Reference no: EM133118288

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT