Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

The flotation cost for a firm is computed as

21/10/2021 Client: muhammad11 Deadline: 2 Day

- Calculating The Cost Of Capital

LG1 11-1 How would you handle calculating the cost of capital if a firm were planning to issue two different classes of common stock?

LG2 11-2 Why don’t we multiply the cost of preferred stock by one minus the tax rate, as we do for debt?

LG2 11-3 Expressing WACC in terms of iE, iP, and iD, what is the theoretical minimum for the WACC?

LG3 11-4 Under what situations would you want to use the CAPM approach for estimating the component cost of equity? The constant-growth model?

LG3 11-5 Could you calculate the component cost of equity for a stock with nonconstant expected growth rates in dividends if you didn’t have the information necessary to compute the component cost using the CAPM? Why or why not?

LG4 11-6 Why do we use market-based weights instead of book-value-based weights when computing the WACC?

LG5 11-7 Suppose your firm wanted to expand into a new line of business quickly, and that management anticipated that the new line of business would constitute over 80 percent of your firm’s operations within three years. If the expansion was going to be financed partially with debt, would it still make sense to use the firm’s existing cost of debt, or should you compute a new rate of return for debt based on the new line of

?

business

LG6 11-8 Explain why the divisional cost of capital approach may cause problems if new projects are assigned to the wrong division.

LG7 11-9 When will the subjective approach to forming divisional WACCs be better than using the firm-wide WACC to evaluate all projects?

LG8 11-10 Suppose a new project was going to be financed partially with retained earnings. What flotation costs should you use for retained earnings?

LG3 11-1 Cost of Equity Diddy Corp. stock has a beta of 1.2, the current risk-free rate is 5 percent, and the expected return on the market is 13.5 percent. What is Diddy’s cost of equity?

LG3 11-2 Cost of Equity JaiLai Cos. stock has a beta of 0.9, the current risk-free rate is 6.2 percent, and the expected return on the market is 12 percent. What is JaiLai’s cost of equity?

LG3 11-3 Cost of Debt Oberon, Inc. has a $20 million (face value) 10-year bond issue selling for 97 percent of par that pays an annual coupon of 8.25 percent. What would be Oberon’s before-tax component cost of debt?

LG3 11-4 Cost of Debt KatyDid Clothes has a $150 million (face value) 30-year bond issue selling for 104 percent of par that carries a coupon rate of 11 percent, paid semiannually. What would be Katydid’s before-tax component cost of debt?

LG3 11-5 Tax Rate Suppose that LilyMac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future, and that they have 1,000 ten-year, nine percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?

LG3 11-6 Tax Rate PDQ, Inc. expects EBIT to be approximately $11 million per year for the foreseeable future, and that they have 25,000 20-year, eight percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC?

LG3 11-7 Cost of Preferred Stock ILK has preferred stock selling for 97 percent of par that pays an eight percent annual coupon. What would be ILK’s component cost of preferred stock?

LG3 11-8 Cost of Preferred Stock Marme, Inc. has preferred stock selling for 96 percent of par that pays an 11 percent annual coupon. What would be Marme’s component cost of preferred stock?

LG4 11-9 Weight of Equity FarCry Industries, a maker of telecommunications equipment, has two million shares of common stock outstanding, one million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $27 per share, the preferred shares are selling for $14.50 per share, and the bonds are selling for 98 percent of par, what would be the weight used for equity in the computation of FarCry’s WACC?

LG4 11-10 Weight of Equity OMG Inc. has four million shares of common stock outstanding, three million shares of preferred stock outstanding, and 5,000 bonds. If the common shares are selling for $17 per share, the preferred shares are selling for $26 per share, and the bonds are selling for 108 percent of par, what would be the weight used for equity in the computation of OMG’s WACC?

LG4 11-11 Weight of Debt FarCry Industries, a maker of telecommunications equipment, has two million shares of common stock outstanding, one million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $27 per share, the preferred shares are selling for $14.50 per share, and the bonds are selling for 98 percent of par, what weight should you use for debt in the computation of FarCry’s WACC?

LG4 11-12 Weight of Debt OMG Inc. has four million shares of common stock outstanding, three million shares of preferred stock outstanding, and 5,000 bonds. If the common shares are selling for $27 per share, the preferred shares are selling for $26 per share, and the bonds are selling for 108 percent of par, what weight should you use for debt in the computation of OMG’s WACC?

LG4 11-13 Weight of Preferred Stock FarCry Industries, a maker of telecommunications equipment, has two million shares of common stock outstanding, one million shares of preferred stock outstanding, and 10,000 bonds. If the common shares sell for $27 per share, the preferred shares sell for $14.50 per share, and the bonds sell for 98 percent of par, what weight should you use for preferred stock in the computation of FarCry’s WACC?

LG4 11-14 Weight of Preferred Stock OMG Inc. has four million shares of common stock outstanding, three million shares of preferred stock outstanding, and 5,000bonds. If the common shares sell for $17 per share, the preferred shares sell for $16 per share, and the bonds sell for 108 percent of par, what weight should you use for preferred stock in the computation of OMG’s WACC?

LG2 11-15 WACC Suppose that TapDance, Inc.’s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is eight percent, while its cost of equity is 13 percent. If the appropriate weighted average tax rate is 34 percent, what will be TapDance’s WACC?

LG2 11-16 WACC Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 11 percent while its cost of equity is 15 percent. If the appropriate weighted average tax rate is 25 percent, what will be JB’s WACC?

LG2 11-17 WACC Suppose that B2B, Inc. has a capital structure of 37 percent equity, 17 percent preferred stock, and 46 percent debt. If the before-tax component costs of equity, preferred stock and debt are 14.5 percent, 11 percent and 9.5 percent, respectively, what is B2B’s WACC if the firm faces an average tax rate of 30 percent?

LG2 11-18 WACC Suppose that MNINK Industries’ capital structure features 63 percent equity, seven percent preferred stock, and 30 percent debt. If the before-tax component costs of equity, preferred stock and debt are 11.60 percent, 9.5 percent , and nine percent, respectively, what is MNINK’s WACC if the firm faces an average tax rate of 34 percent?

LG3 11-19 WACC TAFKAP Industries has three million shares of stock outstanding selling at $17 per share and an issue of $20 million in 7.5 percent, annual coupon bonds with a maturity of 15 years, selling at 106 percent of par. If TAFKAP’s weighted average tax rate is 34 percent and its cost of equity is 14.5 percent, what is TAFKAP’s WACC?

LG3 11-20 WACC Johnny Cake Ltd. has ten million shares of stock outstanding selling at $23 per share and an issue of $50 million in nine percent, annual coupon bonds with a maturity of 17 years, selling at 93.5 percent of par. If Johnny Cake’s weighted average tax rate is 34 percent, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at six percent per year, indefinitely, what is its WACC?

LG4 11-21 WACC Weights BetterPie Industries has three million shares of common stock outstanding, two million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $47 per share, the preferred shares are selling for $24.50 per share, and the bonds are selling for 99 percent of par, what would be the weights used in the calculation of BetterPie’s WACC?

LG4 11-22 WACC Weights WhackAmOle has two million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. If the common shares are selling for $63 per share, the preferred shares are selling for $52 per share, and the bonds are selling for 103 percent of par, what would be the weights used in the calculation of WhackAmOle’s WACC?

LG8 11-23 Flotation Cost Suppose that Brown-Murphies’ common shares sell for $19.50 per share, that the firm is expected to set their next annual dividend at $0.57 per share, and that all future dividends are expected to grow by four percent per year, indefinitely. If Brown-Murphies faces a flotation cost of 13 percent on new equity issues, what will be the flotation-adjusted cost of equity?

LG4 11-21 WACC Weights BetterPie Industries has three million shares of common stock outstanding, two million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $47 per share, the preferred shares are selling for $24.50 per share, and the bonds are selling for 99 percent of par, what would be the weights used in the calculation of BetterPie’s WACC?

LG4 11-22 WACC Weights WhackAmOle has two million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. If the common shares are selling for $63 per share, the preferred shares are selling for $52 per share, and the bonds are selling for 103 percent of par, what would be the weights used in the calculation of WhackAmOle’s WACC?

LG8 11-23 Flotation Cost Suppose that Brown-Murphies’ common shares sell for $19.50 per share, that the firm is expected to set their next annual dividend at $0.57 per share, and that all future dividends are expected to grow by four percent per year, indefinitely. If Brown-Murphies faces a flotation cost of 13 percent on new equity issues, what will be the flotation-adjusted cost of equity?

LG2 11-24 Flotation Cost A firm is considering a project that will generate perpetual after-tax cash flows of $15,000 per year beginning next year. The project has the same risk as the firm's overall operations and must be financed externally. Equity flotation costs 14 percent and debt issues cost 4 percent on an after-tax basis. The firm's D/E ratio is 0.8. What is the most the firm can pay for the project and still earn its required return?

LG6 11-25 Firm-Wide vs. Project-Specific WACCs An all-equity firm is considering the projects shown below. The T-bill rate is four percent and the market risk premium is seven percent. If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), if any, will be incorrectly rejected?

LG6 11-26 Firm-Wide vs. Project-Specific WACCs An all-equity firm is considering the projects shown below. The T-bill rate is four percent and the market risk premium is seven percent. If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), if any, will be incorrectly accepted?

LG7 11-27 Divisional WACCs Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.6, 1.0, 1.3 and 1.6, respectively. If all current and future projects will be financed with half debt and half equity, and if the current cost of equity (based on an average firm beta of 1.0 and a current risk-free rate of seven percent) is 13 percent and the after-tax yield on the company’s bonds is eight percent, what will the WACCs be for each division?

LG7 11-28 Divisional WACCs Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.9, 1.1, 1.3, and 1.5, respectively. If all current and future projects will be financed with 25 percent debt and 75 percent equity, and if the current cost of equity (based on an average firm beta of 1.2 and a current risk-free rate of four percent) is 12 percent and the after-tax yield on the company’s bonds is nine percent, what will the WACCs be for each division?

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Writing Factory
Instant Assignments
Top Academic Guru
Engineering Solutions
Study Master
Coursework Helper
Writer Writer Name Offer Chat
Writing Factory

ONLINE

Writing Factory

I reckon that I can perfectly carry this project for you! I am a research writer and have been writing academic papers, business reports, plans, literature review, reports and others for the past 1 decade.

$16 Chat With Writer
Instant Assignments

ONLINE

Instant Assignments

I am an academic and research writer with having an MBA degree in business and finance. I have written many business reports on several topics and am well aware of all academic referencing styles.

$22 Chat With Writer
Top Academic Guru

ONLINE

Top Academic Guru

As an experienced writer, I have extensive experience in business writing, report writing, business profile writing, writing business reports and business plans for my clients.

$21 Chat With Writer
Engineering Solutions

ONLINE

Engineering Solutions

I am a PhD writer with 10 years of experience. I will be delivering high-quality, plagiarism-free work to you in the minimum amount of time. Waiting for your message.

$27 Chat With Writer
Study Master

ONLINE

Study Master

This project is my strength and I can fulfill your requirements properly within your given deadline. I always give plagiarism-free work to my clients at very competitive prices.

$49 Chat With Writer
Coursework Helper

ONLINE

Coursework Helper

I find your project quite stimulating and related to my profession. I can surely contribute you with your project.

$16 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Menschen a2 1 arbeitsbuch - Musical fountain in china with audio of bhagavad gita - 5902 burnhill dr austin tx 78745 - Fall protection specification section - What does a burning cross mean - Cost of boll and branch sheets - Onslow co purchases a used machine for - Verbal and Nonverbal Communication - Finance environment matrix - Public law outline flowchart - HR management - 10 to the power of 4 - POWERFUL PSYCHIC VOODOO LOST LOVE LOVE SPELLS+27789489516 IN AUSTRALIA, PERTH, HOBART| RETURN LOST PARTNER INSTANTLY - 5.04 understanding 20th century poetry - Assignment - Hughes wholesale cars toowoomba - Discussion - Module 2 Case Assignment - Hilti hit hy 200 - What two purposes are accomplished by recording closing entries - Elstree recycling centre opening times - Pub licensee records south australia - Samkhya theory of causation - Cbus fund address details - Nike gaze 2 radiation sunglasses ladies - Business communications - Original greenstar display manual - Criminal justice - Starwood eame services company bvba - The mean value of land and buildings per acre - One Paragraph per question - Due Today in 4 hours - Gartner magic quadrant for application testing services - No plagiarism/ must be original/ scholarly resources 2015 - 6 act structure tv - Bedford handbook 10th patterns 14th threads bundle - Personification in to kill a mockingbird with page numbers - Yeast respiration experiment temperature - Ancenored - Phlebotomy medical terminology list - Queensland plumbing and wastewater code - First they came for the communists poem - George orwell fact file - Bcg matrix build hold harvest divest - Insulation resistance class i equipment with mineral insulated heating elements - French role play script - Adelaide university football club results - Born a crime identity essay - The purpose of picketing is to ___ a labor dispute - Food dye lab report - Emergency calls to winter park - For math guruu - Scion hero character sheet - Public Speaking-4 - Presentation essay - Molality formula with example - Journal Article Research - Maslow hierarchy of needs questionnaire - Angel of small death and the cod hozier lyrics - Scott road medical centre - Ramón compró tres corbatas. roberto compró tres corbatas. - Amu engl 102 quiz 1 - Discussion: Alternate Selection Procedure Validation Processes - Short answer exam questions - Parking near gloucester hospital - Is 17 rational or irrational - Mcgraw hill marketing simulation answers - What is erab in lte - What did snidely say after filling - Economic exam - List the steps of the accounting cycle - Fort st public school - Drywall repair clips home depot - Alex and eve full movie in english - Business Capital - Personal exam timetable uq - Cardiac step down unit - How to train for aesthetic body - Calculate the radius of vanadium atom - Old spice competitors - Ronessa brown net worth - Who is the old boy in the crucible - Future of nursing report 2015 - Jewelry worn by barbara stanwyck in double indemnity crossword - Zoot suit pdf - NEEDS A General Chemistry II EXPERT! - Fleck 2900 valve manual - Week 3 assignments - Connect extend challenge worksheet - Module 11 Assignment - Sunsuper com au memberonline - Angewandte chemie endnote style - Qut physics bridging course - Is euglena a plant or an animal - Hangman game source code in c++ - Beer's law lab answer key - What makes a good advert - Benzaldehyde and acetone balanced equation - Barium chloride flame color - Why things bite back pdf - Muslim Molvi 7340613399 OnLine No 1 FaMOUs VashIKaraN sPecIaLIsT IN Avadi