Firm has a debt-equity ratio

Assignment Help Financial Management

Reference no: EM13953690

A firm has a debt-equity ratio of .55 and a tax rate of 35 percent. Its cost of equity is 10.6 percent and its pre-tax cost of debt is 8.1 percent. What is the firm’s WACC? a. 8.28 percent b. 8.71 percent c. 9.40 percent d. 9.71 percent

Reference no: EM13953690

Questions Cloud

Interest rates and equity capital costs : If the price of money (e.g., interest rates and equity capital costs) increases due to an increase of anticipated inflation, the risk-free rate will also increase. If there is no change in investment aversion, then the market risk premium (r_M - r_RF..

Maturity than an otherwise identical noncallable bond : A bond that is callable has a chance of being retired earlier than it started turn to maturity. Therefore, if the yield curve is upward sloping, an outstanding callable bond should have a lower yield to maturity than an otherwise identical noncallabl..

Describes a protective put : Which of the following describes a protective put?

Expected to pay an annual dividend : The Hen House is expected to pay an annual dividend of $2.10 a share next year. The company recently announced that future dividends will increase by 2.5 percent annually. The market price is $51.30 a share. What is the cost of equity?

Firm has a debt-equity ratio : A firm has a debt-equity ratio of .55 and a tax rate of 35 percent. Its cost of equity is 10.6 percent and its pre-tax cost of debt is 8.1 percent. What is the firm’s WACC?

What is the firms WACC given a tax rate : Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock, and 55 percent debt. Its cost of equity is 18 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 8.5 percen..

A firms cost of capital : A firm's cost of capital:

Statements related to dividend policy : Which one of the following statements related to dividend policy is correct?

A firms overall cost of equity : A firm's overall cost of equity is:

User Account

All Pages