What''s the firm weighted average cost of capital

Assignment Help Financial Management

Reference no: EM131899856

Mojito Mint company has a debt-equity ratio of .35. The required return on the company's unlevered equity is 12.8 percent, and the pretax cost of the firm's debt is 6.5 percent. Sales revenue for the company is expected to remain stable indefinitely at the last year's level of $17,500,000. Variable costs amount to 60 percent of sales. The tax rate is 40 percent, and the company distributes all its earnings as dividends at the end of each year.

What's the firm’s weighted average cost of capital?

Reference no: EM131899856

Questions Cloud

Discuss the limitations of subordinates : Walter, a senior manager at BottleCap Creations, believes that rather than pointing out the limitations of his subordinates and making them lose their sense.

Which department-agency or bureau has the most influence : National security responsibilities fall across many entities in the federal government. Which department, agency or bureau has the most influence and why?

How did you figure out what the right value was : How did you figure out what the right value was? How closely do the computer's results match the ones you expected?

What is the relationship between business risk : What is the relationship between business risk, financial risk, and beta (systematic or market risk)

What''s the firm weighted average cost of capital : Mojito Mint company has a debt-equity ratio of .35. What's the firm’s weighted average cost of capital?

How much should these bonds sell for today : The bonds pay 6.75% interest, compounded semiannually. Today's required rate of return is 8.7%. How much should these bonds sell for today?

Create a new variable y and assign it the value four : Create a new variable y, and assign it the value 4. Sum x and y, and associate the resulting value with x. What are x and y's new values?

How many of the reports meet the definition of news : How many of the reports meet the definition of news as ‘what someone, somewhere wants concealed, everything else is advertising'?

What is the breakeven point in volume of clinic visits : Variable costs are projected at $200 per clinic visit, and fixed costs for the agreement are $800,000. What is the breakeven point in volume of clinic visits?

User Account

All Pages