Find wacc in given conditions

Reference no: EM131943159

Question: Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 40%. Assume that the firm's cost of debt, rd, is 6.7%, the firm's cost of preferred stock, rp, is 6.2% and the firm's cost of equity is 10.7% for old equity, rs, and 11.19% for new equity, re. What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity? Round your answer to 3 decimal places. Do not round Intermediate calculations. What is the firm's weighted average cost of capital (WACC2) if it has to issue new common stock? Round your answer to 3 decimal places. Do not round Intermediate calculations

Reference no: EM131943159

Questions Cloud

What is the cost of new common equity : What is the cost of new common equity considering the estimate made from the three estimation methodologies? Round your answer to 2 decimal places.

Calculate your target savings by the time you retire : Based on about Finance at University of Tulsa you have started to think year retirement planning, You that at a minimum you will need $70.000 per.

What is the firm cost of equity using the given approaches : The firm uses a 3.7% risk premium when arriving at a ballpark estimate of its cost of equity using the bond-yield-plus-risk-premium approach.

What is the amount of commission that bart must pay : As Bart Brownlee approached retirement, he decided the time had come to invest some of his nest egg in a conservative fund. He chose the Franklin Utilities.

Find wacc in given conditions : What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity? Round your answer to 3 decimal places.

Find the aftertax cost of debt : Bargeron Corporation has a target capital structure of 64 percent common stock, 9 percent preferred stock, and 27 percent debt.

What role do interest rates play in mounting consumer debt : Based on the articles and your independent research, respond to the following: What role do interest rates play in mounting consumer debt?

What is the company cost of preferred stock : Barton Industries can issue perpetual preferred stock at a price of $47 per share. The stock would pay a constant annual dividend of $3.10 per share.

What are the earnings per share : Barnyard, Inc.'s 2008 income statement lists the following income and expenses: EBIT = $505,000, Interest expense = $52,500, and Taxes = $157,000.

User Account

All Pages