What is the company weighted-average cost of capital

Assignment Help Financial Management
Reference no: EM131530880

Dusit is financed 26% by debt yielding 8.3%. Investors require a return of 15.3% on Dusit’s equity.

a. What is the company’s weighted-average cost of capital if the corporate tax rate is 35%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

  Weighted-average cost of capital

b. What would be the company’s cost of capital if it were exempted from corporate tax? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

  Weighted-average cost of capital

Reference no: EM131530880

Questions Cloud

Expected effects on individual costs of debt and equity : Increasing the relative proportion of debt financing in a company’s capital structure has which of expected effects on individual costs of debt and equity?
Breakeven point and moneyness for both the buyer and seller : Plot the contingency graph for the option. Be sure to label maximum gains/losses, the breakeven point, and moneyness for both the buyer and seller.
Company cost of capital is the return investors : The company cost of capital is the return investors would require on a portfolio of the company's:
Effective rate of interest : Find the interest rate (or rates of return) in each of the following situations. You borrow $700 and promise to pay back $728 at the end of 1 year.
What is the company weighted-average cost of capital : What is the company’s weighted-average cost of capital if the corporate tax rate is 35%?
Recapitalization-stock splits and dividend payout : Define and provide each examples. Recapitalization, Stock Splits, Dividend payout, Cash conversion cycle.
One-time cost of home ownership : One can lower insurance premiums by doing all of the following except. one-time cost of home ownership.
Future value of an annuity for various compounding periods : Future Value of an Annuity for Various Compounding Periods. Find the future values of the following ordinary annuities:
Calculate the expected returns for roll and ross by filling : Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals)

Reviews

Write a Review

Financial Management Questions & Answers

  The investment of this buyer as function of interest rate r

Consider a homebuyer/investor who plans to buy a new house, the price of which is 1 million dollars. Suppose the buyer does not have any initial savings for the down payment. That is, if the mortgage asks him to repay more than $ 50,000 per year (thi..

  Retirement account at interest compounded annually

You deposit $2,500 today in a retirement account at 6% interest compounded annually. How much more money will you have if you leave it in a for 35 years rather than 25 years?

  Maximum amount that company should pay for investment

Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Wh..

  Discounted cash flow approach-what is its cost of equity

The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $29.50 per share, its last dividend was $1.80, and the company will pay a dividend of $1.89 at the end o..

  Describe the return to investors

What variable would you concentrate your eff orts on and why? makesure properly cite your work if you are borrowing anything - type of equation works best and which industries this equation would not apply.

  Use a geometric average in your calculations

Today, interest rates on 1-year T-bonds yield 1.6%, interest rates on 2-year T-bonds yield 2.45%, and interest rates on 3-year T-bonds yield 3.5%. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be s..

  Net present value of a series of cash flows

Which element should NOT be taken into account when determining the net present value of a series of cash flows?:

  About acquiring a commercial loan

What are some good in depth questions to ask commercial bank business loans. officer (guest speaker) about acquiring a commercial loan?

  What is the value of cash coverage ratio

A firm has sales of $4,840, costs of $2,640, interest paid of $179-depreciation of $493. The tax rate is 34 percent. What is the value of cash coverage ratio?

  Present and future values for different interest rates

Present and future values for different interest rates-Find the following values. Compounding/discounting occurs annually. An initial $700 compounded for 10 years at 8%.

  Uses only debt and common equity

Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 9%, as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. What is its cost o..

  Difficult investors to remove exposure to unsystematic risk

It is very difficult for investors to remove their exposure to unsystematic risk. It is very easy for investors to remove their exposure to systematic risk. Stock A's stock has a beta of 1.30, and its required return is 12.00%. Stock B's beta is 0.80..

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