What is its pretax cost of debt

Assignment Help Financial Management

Reference no: EM131061204

Buddy Corp. has a target debt-equity ratio of 0.60. Its WACC is 10.5% and the tax rate is 30%. If the company's cost of equity is 16.5% what is its pretax cost of debt?

Reference no: EM131061204

Questions Cloud

Fixed assets to support growth in sales : Fixed assets are $490,000 and sales are projected to grow to $900,000. Huo much in new fixed assets to support this growth in sales? Assume the company operates at full capacity.

Calculate the direct labor efficiency variance : Accelerator, Inc. manufactures a fuel additive called surge. Surge sells for $44 per container and the company produces and sells 80,000 containers per month. Calculate the direct labor efficiency variance for September. If the variance is favorable,..

Explain two to three management or efficiency arguments : Review "The Katrina Breakdown" in Chapter. Setting aside the philosophical and legal issues this case raises, identify and explain two to three management or efficiency arguments for and against a more centralized response to large national disas..

Determining the expected rate of return : You are requested to advise him that (i) in what way he can invest that money and why he has to choose such portfolio? (ii) in order to get the expected rate of return what techniques he has to follow?

What is its pretax cost of debt : Buddy Corp. has a target debt-equity ratio of 0.60. Its WACC is 10.5% and the tax rate is 30%. If the company's cost of equity is 16.5% what is its pretax cost of debt?

What is the firms WACC when the capital weightings : If the cost of equity for Flower Corp is 11% and with the knowledge that Flower's current YTM is 7% and its coupon rate is 10%, what is the firm's WACC when the capital weightings are as follows: Common equity= 40%, Debt= 60%. Assume a 35% tax rate.

What is the expected one-year ppp spot rate : What is the expected one-year PPP spot rate? What is the expected percent appreciation/depreciation of the British Pound?

Calculate the aftertax cash flows for first year for bond : Suppose your company needs to raise $35 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and you’re evaluating two issue alternatives: How many of the coupon bonds would yo..

What is the variance of the returns on rtf : The following probability distribution refers to expected outcomes for RTF, Inc. under two economic states: What is the variance of the returns on RTF?

User Account

All Pages