What will be the companys weighted-average cost of capital

Assignment Help Managerial Accounting

Reference no: EM133342656

Question: Digital Organics is all-equity-financed. The expected rate of return on the company's shares is 13.75%. Suppose the company plans issues debt, repurchases shares, and moves to a 31% debt-to-value ratio (D/V = 0.31). Assume the cost of debt is 9.25% and the tax rate is 21%. What will be the company's weighted-average cost of capital at the new capital structure? Should the company borrow as planned and why?

Reference no: EM133342656

Questions Cloud

Define habituation and sensory adaptation : What are the basic processes underlying the sense of vision? Define habituation and sensory adaptation.

Describe how the cell of a member of the glaucophyta : Describe how the cell of a member of the glaucophyta differs from these of other autotrophic protists such as Chlorophyta and rhodophyta

What is a brief summary on the history of marine biology : What is a brief summary on the history of marine biology. List some information about the voyages, people, and instruments that laid the foundations of marine

What do echinoderms have instead of a brain : How many parts are there in the symmetry of a sea star and What do echinoderms have instead of a brain

What will be the companys weighted-average cost of capital : What will be the company's weighted-average cost of capital at the new capital structure? Should the company borrow as planned and why?

What is your current leadership style : What is your current leadership style? How will you further develop your leadership skills?

Give one possible explanation for each of the six variances : Compute the variances - Give one possible explanation for each of the six variances computed in requirement (a)

Establish short-term and long-term career goals : A common practice for leaders is to establish short-term and long-term career goals. Many leaders set one-year and five-year goals

Whats important and interesting about corporate taxes : What's important and interesting about Corporate Taxes and Taxable Income? and what sets them apart from each other and from other federal taxation topics

User Account

All Pages