User Account

All Pages

Find the weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM132444642

Company ABC's total capital consists of $150 million in debt, $50 million in leased assets, no outstanding preferred stock, $500 million in common stock, and $300 million in retained earnings. Its after-tax specific costs are 7% for the debt, 8% for the leases, and 9% for the equity.

a. Find the Weighted Average Cost of Capital

b. If Company ABC wanted to lower its WACC, what could it do?

c. Why is it important for Company ABC to know its WACC?

Reference no: EM132444642

Questions Cloud

Identify and describe the current corporate-level strategy : Analyze the business environment for the industry where the company is located. What trends/changes are occurring in the marketplace?
Develop a process improvement plan : Develop a 7-page process improvement plan for a provided scenario or a business and process of your choice, using data to support your recommendations.
Define the term controlled clinical trials : State how study designs compare with respect to validity of causal inference. Define the term controlled clinical trials and give examples.
Describe the responsibility of global citizenship : Articulate the responsibility of global citizenship and multicultural understanding with regard to academic and professional pursuits.
Find the weighted average cost of capital : a. Find the Weighted Average Cost of Capital b. If Company ABC wanted to lower its WACC, what could it do?
What rate will ubs handle the transaction : At what rate will UBS handle the transaction? If the current exchange rate is CHF1.3/$, what would the cash flow be?
Specific amount of dollars for euros : Describe this option as the right to sell a specific amount of dollars for euros at a particular exchange rate of euros per dollar.
Why is Mars considered so inhospitable : What would be needed to ensure humans could survive on Mars? In particular, where would we get our food, our oxygen, our water and our energy?
Discuss unemployment and lack of economic opportunity : Prior to beginning work on this discussion forum, review the Narrowing a Topic and Developing a Research Question web page and Integrating Research tutorial.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the expected growth rate of dorpacs dividends

(a) What is the expected growth rate of Dorpac's dividends? (b) What is the expected growth rate of Dorpac's share price?

  The standard deviation of the market return is 21 percent

the standard deviation of stock returns for stock a is 38 percent. the standard deviation of the market return is 21

  What is the additions to retained earnings for 2008

What is the additions to retained earnings for 2008?

  What final payment will the bank require

If the interest rate on the loan is 7%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

  Consultant total profits from three projects

Assuming independence of outcomes, find the mean (in thousands of $) of the consultant's total profits from these three projects.

  What is the npv of the project if the discount rate

After year 4 the cash flows will increase by 3% per year forever. What is the NPV of the project if the discount rate is 15%?

  What explains difference between free cash flow and earnings

Some analysts trumpet the saying "Cash is King." They mean that cash is the primary fundamental that the equity analyst should focus on. Is cash king?

  What is cost of goods manufactured for the period

A company has beginning work in process of $74,000. Prime costs committed to production during the period are $840,000. Manufacturing overhead is applied.

  . what is the weight of the preferred stock to firm''s weight

Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yield 9.5 percent. The company also has 4.0 million shares of common stock outstanding. The stock has a beta of 1.2 and sells for $55 a share. The U.S. Tre..

  Describe how ikea grows and protects its core business

Describe how IKEA grows and protects its core business? and what are the important decisions that IKEA must make in developing branding strategy

  What does it mean for someone to be in for bearance

Finance 408- What does it mean for someone to be in forbearance or deferment? When would a person enter into these situations? What does it mean for a borrower to be delinquent on a student loan? What about in default?

  What is the effective annual rate

How much money do you need to have in the bank to pay for a 4 year college degree if tuition is $15,000 per year and your bank gives you 1.5% interest. What is the effective annual rate on a 18% APR loan if interest is compounded monthly?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd