Target weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM131710231

Jade Inc. has identified some valuable growth opportunities and would like to maximize these opportunities for their shareholders. Management has decided that they want to accomplish this goal by adjusting their capital structure in an attempt to decrease their cost if capital and have identified a target weighted average cost of capital of 9.6%. The firm currently has an after-tax cost of debt of 5.1% and a cost of equity of 11.1%.

If Jade is to meet their target weighted average cost of capital, what debt-equity ratio is needed? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

Reference no: EM131710231

Questions Cloud

What is the current risk-free rate : The common equity of NuPress currently carries a beta of 1.4, its D/E ratio is 0.67, and the expected return on the market is 10.2%.
What? ?is? ?the? ?role? ?of? ?the? ?irb : Describe? ?how? ?this? ?study? ?impacts? ?the? ?attitude? ?of? ?African? ?Americans? ?and? ?other? ?minorities toward? ?government? ?and? ?any? ?other? ?resear
Find the populations of daily production volume : New production methods stressing teamwork have recently been instituted at car manufacturing plants in Detroit. Three teamwork production methods.
Analyse the revenue process cycle scenarios : ACC217 Accounting Information Systems Assignment. Analyse revenue process cycle scenarios and advise ACE of the threats and security issues that might surface
Target weighted average cost of capital : If Jade is to meet their target weighted average cost of capital, what debt-equity ratio is needed?
Determine the domain and range of the variables : Determine the domain and range of the variables - Determine the equation of the above function if the parabola passes through a point with x-intercept of 10
Discuss approach to combating five products : determine whether you agree or disagree with the approach suggested. Explain your rational
What are joint profit maximizing prices of copper and zinc : What are the joint profit maximizing prices of copper and zinc? How does your answer to (c) compare to that in (b)? Explain the difference.
Discuss many times labor negotiations are very contentious : Many times labor negotiations are very contentious, especially when the parties have had an adversarial relationship, as evidenced by a number of unresolved

Reviews

Write a Review

Finance Basics Questions & Answers

  When capital markets are perfect

When capital markets are perfect, except for corporate taxes, what is the optimal level of debt the company should issue? In reality, do we observe firms that maintain this optimal level of debt? Why or why not?

  Determine the ultimate price

If you have been keeping up with the nation's finances, you know that Fannie Mae and Freddie Mac are in trouble. So are Lehman Bros. and Washington Mutual Bank.

  Calculate the inventory to sale sale to cash and purchase

Two years of financial statement data for the Munich Export Corporation are shown in Problem 5.A. Calculate the inventory-to-sale, sale-to-cash, and purchase-to-payment conversion periods for Munich Exports for 2010.B. Calculate the length of Munich ..

  What is ratio measuring and is a higher ratio good or bad

What is the ratio measuring? Is a higher ratio good or bad? Is there a level that would indicate the company is healthy in the measured area?

  Which is assumed to be attainable over the next 40 years

If Hal makes end of year $2000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year?

  What is the value of ending inventory

what is its gross profit? What is the value of ending inventory? What's the Old inventory units in quantity and cost, as well as the new inventory quantity and cost. What's the sales?

  Importance of modern banking in the economic process

Evaluate the importance of modern banking in the economic process. In the context of the Global Financial Crisis, what potential costs may banks impose on society. Critically assess why such costs emerge in the first place.

  When establishing the level of misstatement that is

public accounting firms are being implored to assess a companys reported earnings per share relative to the market

  Analysis of the ethical concerns raised by the situation

The paper must identify which ethical outlook as applied to this particular situation will result in the best legal outcome for the business.

  Why is book value often meaningless

Why can a relatively small number of stock appreciation rights prove to be a material drain on future earnings and cash of a company?

  Write a proposal of no more than 750 words outlining the

write a proposal of no more than 750 words outlining the research approach you will use for your strategic plan due in

  Calculate the firm’s tax liability using the corporate tax

Calculate the firm’s tax liability using the corporate tax rate schedule given in Table 2.1. How much are Tantor Supply’s 2010 after-tax earnings? What was the firm’s average tax rate, based on your findings in part a?

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