Find the weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM13280615

A firm has a capital structure which consists of 30% debt and 70% equity. The before-tax cost of debt is 10% and the cost of equity is 15%. Find the weighted average cost of capital (WACC) if the firm's tax rate is 34%.

Hint: The formula for finding the weighted average of capital is found in "Discount rate determination"

Reference no: EM13280615

Questions Cloud

What is the yield to maturity for these bonds : Rogue Racing Inc. has $1,000 par value bonds with a coupon rate of 8% per year making semiannual coupon payments. If there are twelve years remaining prior to maturity and these bonds are selling for $876.40, what is the yield to maturity for thes..
How far apart were the centres of the two tunnels : A competitive mini-golf player notices an opponent's ball situated 50cm in front of a wall containing two tunnels. One tunnel leads to the hole, the other to a bunker. The player skill fully putts their ball due East at the opponent's ball with a ..
What is the monthly annuity payment under this schedule : The remaining balance will be $120,000. The bank will loan you this remaining balance at 4.375% APR. You will make monthly payments with a 20-year payment schedule. What is the monthly annuity payment under this schedule.
Calculate the surface tension of blood plasma : To lift a wire ring of radius 1.85 cm from the surface of a container of blood plasma, Calculate the surface tension of blood plasma
Find the weighted average cost of capital : A firm has a capital structure which consists of 30% debt and 70% equity. The before-tax cost of debt is 10% and the cost of equity is 15%. Find the weighted average cost of capital (WACC) if the firm's tax rate is 34%.
For what value of d is the full wave average is zero : a signal alternates abruptly between -1V and +2V with a duty cycle d. sketch a waveform, and find its full cycle average if d=25%, 50%, 75% for what value of d is the full wave average 0
Calculate the surface tension of the fluid : A certain fluid has a density of 1080 kg/m3 and is observed to rise to a height of 1.8 cm in a 1.0-mm-diameter tube. Calculate the surface tension of the fluid
Find the gauge pressure at the pipe input : A straight horizontal pipe with a diameter of 1.0 cm and a length of 53 m carries oil with a coefficient of viscosity of 0.11 N · s/m2. Find the gauge pressure at the pipe input
What is the maximum closed-loop voltage gain obtained : An audio amplifier system, using a noinverting op-amp circuit, needs to have a small-signal bandwidth of 20kHz. The open-loop low-frequency voltage gain of the op-amp is 10^5 and the unity -gain bandwidth is 1 MHz.

Reviews

Write a Review

Finance Basics Questions & Answers

  How many barrels of crude 1 should be purified

Before blending the crude oil into gas, any amount of each crude can be "purified" at a cost of $3.50 per barrel. This purification eliminates half of the impurities in the crude oil.

  How can ordeal mechanisms reduce a particular problem

How can ordeal mechanisms reduce a particular problem with some benefits programs. What is the problem, and which ordeal mechanism or mechanisms do you prefer to use in which programs. Be specific in every case.

  What cash price should duncan accept on a tv set listed

What cash price should Duncan accept on a TV set listed at $1195 if Duncan could use the cash to pay off debt now, on which it pays a 13.5% simple rate of interest ?

  What is the cost of common equity capital for the firm

If the current price of Two-Stage's common stock is $17.61, what is the cost of common equity capital for the firm?

  What is the company fixed operating costs

A company reports that if it's sales are $80,000, EBIT = $8,000, net income = $2,400, DOL = 2.5, and DFL = 2.0(a) What is the company's fixed operating costs? (b) What will the company's net income be if sales turn out to be $88,000 rather than $8..

  What is the risk-free rate

The expected return on Mike's Seafood stock is 17.9 percent. If the expected return on the market is 13 percent and the beta for Mike's is 1.7, then what is the risk-free rate?

  Discuss the significance of the price

Decribe the information that should be disclosed in financial statements, or notes thereto, that are prepared when stock warrants are outstanding in the hands of three groups listed above.

  Find the monthly payment, including principal and interest

Annie Oakley is buying a home for $215,000. She will finance the mortgage for fifteen years and pay 7 percent interest on the loan. She makes a down payment that is 20% of the purchase price.

  Sources of short-term-medium-term and long-term

What are some sources of short-term, medium-term, and long-term international financing? What are the costs associated with each of these sources?

  Does this hurt the growth in the economy?

Assuming a company does not have enough excess retained earnings to fund future projects that have positive NPV's, they would have to sell debt or issue new capital. Issuing new capital is often thought of as a negative sign to current stock holders,..

  What final payment will the bank require

If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

  Acquisition-internal new venturing

Under what circumstances might it be best to enter a new business area by acquisition? Under what circumstances might internal new venturing be the preferred mode of entry?

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!

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