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What is the company cost of equity

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Question - FCOK, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 22% debt. Currently there are 5,308 shares outstanding and the price per share is $35.06. EBIT is expected to remain at $59,569 per year forever. The interest rate on new debt is 6.81% and there are no taxes. Ms. Brown, a shareholder of the firm, owns 124 shares of stock. What is her cash flow under the current capital structure (without the debt), assuming the firm has a dividend payout rate of 100%.

FCOK, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 20% debt. Currently there are 5,657 shares outstanding and the price per share is $40.3. EBIT is expected to remain at $61,552 per year forever. The interest rate on new debt is 11.83% and there are no taxes. Ms. Brown, a shareholder of the firm, owns 127 shares of stock. What is her cash flow under the proposed capital structure (with the debt), assuming the firm has a dividend payout rate of 100%.

Shadow Corp. has no debt but can borrow at 6.37%. The firm's WACC is currently 10.92% and the tax rate is 37%. What is the company's cost of equity?

Shadow Corp. has no debt but can borrow at 5.12%. The firm's WACC is currently 11.67% and the tax rate is 38%. If the company converts to 27% debt, what will its cost of equity be?

Reference no: EM132909457

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