User Account

All Pages

What is the approximate after-tax weighted average cost

Assignment Help Financial Accounting
Reference no: EM132745873

Question - Droz's Hiking Gear Ltd has found that its equity capital shares have a beta equal to 1.5 while the risk-free return is 8% and the expected return on the market is 14%. It also has 7-year maturity $1 000 par value bonds outstanding with a current price of $767.03. The bonds have an annual coupon rate of 7%. 

If the company is financed with $120 million of ordinary shares (market value) and $80 million of debt, then what is the approximate after-tax weighted average cost of capital for Droz's if it is subject to a 35% company tax rate (round to the nearest 0.5%)?

a. 13.35%

b. 11.88%

c. 11.76%

d. 10.2%

Reference no: EM132745873

Questions Cloud

What elaine corporation average accounts receivable balance : As a result of the changes in collection procedures, Elaine Corporation's average accounts receivable balance will increase(decrease) by
Byd develop competitive advantage over other manufacturers : What key operations decisions helped BYD develop a competitive advantage over other manufacturers?
What should have an average collection period of : It should be related to the firm's credit terms. For example, a firm that allows terms of 2/10, n/30 should have an average collection period of
What annual peso return will earn : QRS makes large cash payments averaging P17,000 daily. If QRS can use the extra cash to earn 14% annually, what annual peso return will it earn?
What is the approximate after-tax weighted average cost : What is the approximate after-tax weighted average cost of capital for Droz's if it is subject to a 35% company tax rate (round to the nearest 0.5%)
Different options for staffing policies : What are the different options for staffing policies available to them? Which option do you think works best and why?
How might a board of directors obtain an understanding : Given that directors typically do not interface directly with key stakeholders, how might a board of directors obtain an understanding of key stakeholder.
What the estimated total cash collections for october : What the estimated total cash collections for October 2018 from accounts receivable would be? 10 percent collected in the second month after sale
Prepare the general journal entry to record interest payment : The company uses the straight-line method of amortizing bond discounts. Prepare the general journal entry to record the first interest payment

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd