Reference no: EM133377055

Question 1

A company finances its operations with 51 percent debt and the rest using equity. The before-tax cost of debt is 5.5% and the required rate of return on the stock is 14.5%. What is company's WACC? Assume the tax rate is 30%

Round the answer to the nearest 2 decimal percentage points. For example, if your answer is 12.345%, then enter 12.35 in the answer box.

Question 2

The ABC Company has a cost of equity of 10.35 percent, a before-tax cost of debt of 3.37 percent, and a tax rate of 21 percent. What is the firm's weighted average cost of capital if the proportion of debt is 78%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 3

Suppose a company is expected to pay a dividend of $12.51 next year. The dividend is expected to grow at 11.49% each year. If the stock is currently selling for $62.96, what is the required rate of return on the stock?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

Question 4

Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 8.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company's tax rate is 30%. What is the after-tax cost of debt?

Group of answer choices

4.40%

8.80%

5.72%

3.08%

6.16%

Question 5

ABC, Inc.'s target capital structure is 30% debt, 45% preferred, and 25% common equity. The before-tax cost of debt (RD) is 5.48%, the cost of preferred stock (RP) is 12.44%, and the cost of common stock (RE) is 28.1%. If the tax rate is 21%. What is the WACC?

Enter your answer as a percentage and round off to two decimal points. Do not enter % in the answer box.

Question 6

ABC, Inc., has 1,840 shares of common stock outstanding at a price of $491 a share. They also have 1,506 shares of preferred stock outstanding at a price of $91 a share. There are 113 bonds outstanding that are priced at $1,146. What is the weight of the preferred stock in the capital structure?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.