What is its pretax cost of debt

Assignment Help Financial Management
Reference no: EM131616067

Fyre, Inc., has a target debt−equity ratio of 1.30. Its WACC is 9.3 percent, and the tax rate is 38 percent.

a. If the company’s cost of equity is 15 percent, what is its pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. If instead you know that the aftertax cost of debt is 6.2 percent, what is the cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.).

Reference no: EM131616067

Questions Cloud

What ethical issues can arise in short selling : The stock market plays a very important role in a nation's economy. What ethical issues can arise in short selling? Would you engage in short selling?
What is value of the investment at the current interest rate : What is the value of the investment at the current interest rate of 12.5 percent?
Investment to reach the desired level at first bank : How long will it take your initial $98,000 investment to reach the desired level at First Bank, which pays simple interest?
What is the value of stock today at discount rate : What is the value of this stock today at a discount rate of 12 percent?
What is its pretax cost of debt : If the company’s cost of equity is 15 percent, what is its pretax cost of debt?
Duke energy has recently issued bond with characteristics : Duke Energy has recently issued a bond with the following characteristics: maturity: 20 years, coupon rate: What should be the price of this bond?
Compute the amount of the lease receivable : Compute the amount of the lease receivable. Prepare all necessary journal entries for Crosley for 2017.
A riskaverse investor will avoid investing in stocks : Successful young firms often have high initial earnings growth rates. A riskaverse investor will avoid investing in stocks.
Equity in small private firms are called angel investors : Individual investors who buy equity in small private firms are called angel investors.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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