Firm weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM131473165

A firm, based on market value, has 70% stock financing and 30% debt. The cost of equity financing averages 13%. The pre-tax cost of debt financing averages 7%. Tax rate is .40  Calculate the firm's weighted average cost of capital (WACC) from this data.

Reference no: EM131473165

Questions Cloud

Excellent business english : What is expected is about 3 or 4 paragraphs. It must be written in excellent business English and be fully referenced using the author-date (Harvard) method.
Does facebook have a strategy : Read the Mini Case Study, "Does Facebook Have a Strategy" What do you believe is Facebook’s competitive advantage?
Define working capital and the revenue cycle : Q.1. Define working capital and the revenue cycle. And also explain working capital and revenue cycle management strategies.
Differentiating order qualifiers and order winners : Explain the importance of identifying and differentiating order qualifiers and order winners. What roles do marketing and operation play in them?
Firm weighted average cost of capital : The pre-tax cost of debt financing averages 7%. Tax rate is .40 Calculate the firm's weighted average cost of capital (WACC) from this data.
What is the difference between validity and reliability : What is the difference between validity and reliability? How would I know that my survey is both valid and reliable?
Expected dividend amount in the next year : By how much would the cost of new stock exceed the cost of common from retained earnings? What is the expected dividend amount in the next year?
Compute the overhead controllable variance : Pine Company reports 19,100 actual direct labor hours, and it incurs $167,200 of manufacturing overhead costs. Compute the overhead controllable variance.
Simulate the CSTR described in example : For part 2 you need to determine the PI parameters, Kc and tI, using any one of the tuning methods covered in this course

Reviews

Write a Review

Finance Basics Questions & Answers

  Computing the required rate of interest

If your uncle borrows $60,000 from the bank at 10 percent interest over the seven-year life of the loan, what equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest (round to the nearest dollar)?

  There is no counterparty risk on the cds the annualized

a six-year cds on a aa-rated issuer is offered at 150bp with semiannual payments while the yield on a six-year annual

  How do we define risk what does it mean to diversify the

how do we define risk? what does it mean to diversify your portfolio and what are you trying to gain by so doing? what

  What is the dollar value of a 4-year 1 million yen loan

Your company can get yen loans for 2.0%. Dollar rates on the same loans are 4.5%. The spot yenper dollar exchange rate is 104. The forward rates for years 1 thru 4 are, 101.51, 99.08, 96.71, and94.40, respectively. What is the dollar value of a 4-..

  Conceptually most right capital budgeting method

What is your suggestion on this project according to conceptually most right capital budgeting method.

  What is alternative chosen using the optimistic criterion

What is the alternative chosen using the optimistic (maximax) criterion? - What is the alternative chosen using the pessimistic (minimax) criterion?

  Briefly explain how the "january effect" anomaly

Briefly explain how the "January effect" anomaly contradicts the efficient market hypothesis or theory.

  Illustrations of business risk measurement

Can you come up with some illustrations of business risk measurement where bell curve type analysis is inappropriate? This will take a little research on the Internet. Why may the bell curve be an inappropriate tool for looking at market risk? Fi..

  Why firms prefer to report the securitization of receivables

Most firms prefer to report the securitization of receivables as a sale. The alternative is to view the arrangement as a collateralized loan with the receivables remaining on the firm's balance sheet. Speculate on why firms prefer to report the secur..

  How much should you be willing to pay for bond x today

Bond X has 20 years to maturity, a 11% annual coupon, and a $1,000 par value. The market return on Bond X is 8%, and if you buy it you plan to hold it for 5 years.

  Evaluate the pros and cons of offshore outsourcing

Evaluate the pros and cons of offshore outsourcing for the countries involved. What happens to jobs, resource utilization, knowledge, experience, and expertise of the countries involved with outsourcing? Does society at large benefit?

  What is your guess regarding management perception

What is your guess regarding management's perception of the firm's long-run earnings (rounded to the nearest cent)?

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