Divided Walls Construction (DWC) has determined the yield to maturity (YTM) on new bonds is 5 percent, its cost of retained earnings is 8 percent, and its cost of new common stock is 11 percent. If DWC’s capital structure consists of 40 percent debt and 60 percent common equity, what is its weighted average cost of capital (WACC) if it does not have to issue new stock to raise additional funds and must issue new stock to raise additional funds? DWC’s marginal tax rate is 35 percent.
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11-17. Divided Walls Construction (DWC) has determined the yield to maturity (YTM) on new bonds is 5 percent, its cost of retained earnings is 8 percent, and its cost of new common stock is 11 percent. If DWC’s capital structure consists of 40 percent debt and 60 percent common equity, what is its weighted average cost of capital (WACC) if it
- does not have to issue new stock to raise additional funds and
- must issue new stock to raise additional funds?
DWC’s marginal tax rate is 35 percent.
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- Divided Walls Construction (DWC) has determined that the yield to maturity (YTM) on new bonds is 5 percent, its cost of retained earnings is 8 percent, and its cost of new common stock is 11 percent. If DWC’s capital structure consists of 40% debt and 60$ common equity, what is its weighted average cost of capital (WACC) if it (a) does not have to issue new stock to raise additional funds and (b) must issue new stock to raise additional funds? DWC’s marginal tax rate is 35 percent.You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of %4. The current market price per share of common stock is $22.15. The flotation costs are %6 of price per share. The tax bracket is %40. Calculate the wacc when the Corporation is to finance its investments through a new stock issue.ou have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 45.00% debt and the remaining is common equity. XYZ's bonds have a yield of 8.00%. The corporation paid dividend of $0.61 and the future dividends are expected to grow at a constant rate of 6.00%. The current market price per share of common stock is $17.50. The flotation costs are 10.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the corporation is to finance its investments through a new stock issue.
- You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 45.00% debt and the remaining is common equity. XYZ's bonds have a yield of 8.00%. The corporation paid dividend of $0.61 and the future dividends are expected to grow at a constant rate of 6.00%. The current market price per share of common stock is $17.50. The flotation costs are 10.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the corporation is to finance its investments through a new stock issue.Your Answer:(Round to TWO decimals.)The WACC is: ..............................You are given the following information for Golden Fleece Financial: Long-term debt outstanding: Current yield to maturity (rdebt) : Number of shares of common stock: Price per share: Book value per share: Expected rate of return on stock (requity : Cost of capital $ 450,000 % 8% 17,500 $ 50.50 Calculate Golden Fleece's company cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. $29 15%E12-2 Chancellor lndustries has available retained earnings of $ 1.2 million. The company plans to make two investments that require financing of $ 950,000 and $ 1.75 million respectively. Chancellor uses a target capital structure with 60 percent debt and 40 percent equity. Apply the residual theory to determine the dividends that can be paid and calculate the resulting dividend payment ratio.
- (b) A firm has determined its optimal capital structure which is composed of the following sources. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate of 3% for the last four years. It is expected that to sell, a new common stock issue must be underpriced, with floatation costs of $1 per share. Based on the above information, what is the firm's cost of preferred stock and cost of a new issue of common stock? Which of the two sources offers a lower cost? Show your workings. ( 10 )Hello. I need help with the following question please. Taylor Company has a target capital structure that consists of $3.3 million of debt capital, $2.5 million of preferred stock financing, and $2.8 million of common equity. The corresponding weights of its debt, preferred stock, and common equity financing that should be used to compute its weighted cost of capital (rounded to the nearest wo decimal places) are: 38.37%, 29.07%, and 32.56%, respectively 32.04%, 34.53%, and 33.43%, respectively 29.07%, 32.56%, and 38.37%, respectively 34.53%, 33.43%, and 32.04%, respectively Consider the following case: Mason Limited, a key competitor of Taylor Company in the construction field, has a capital structure consisting of 45% debt, 5% preferred stock, and 50% common equity. Concerned that its cost of capital may put it at a competitive disadvantage vis-a-vis the Taylor Company, a Mason analyst has been tasked with computing and comparing the weighted costs…Blazingame Inc.'s capital components have the following market values. Debt$34,030,000Preferred Stock16,500,000Common equity47,860,000 Calculate the firm's capital structure and show the weights that would be used for a weighted average cost of capital (WACC) computation. Round the values to the nearest dollar and the weights to three decimal places of percentage. Debt$ fill in the blank 1 Values Weights Debt $ _____ Preferred Stock ____ _____ Common Equity ____ _____ $ _____ _____
- 9-16. (Weighted average cost of capital) The capital structure for the ABC Corporation is provided below. The company plans to maintain its debt structure in the future. Tf the firm has a 7 percent after-tax cost of debt, a 12.5 percent cost of preferred stock, and a 20 percent cost of common stock, what is the firm's weighted average cost of capital? CAPITAL STRUCTURE (€000) Bonds €2,100 Preferred stock 350 Common stock 3,400 Total €5,850Whispering Pines Inc. is all-equity-financed. The expected rate of return on the company's shares is 9.65%. a. What is the opportunity cost of capital for an average-risk Whispering Pines investment? (Enter your answer as a percent rounded to 2 decimal places.) Opportunity cost of capital % b. Suppose the company issues debt, repurchases shares, and moves to a 24% debt-to-value ratio (D/ V = 0.24). What will be the company's weighted-average cost of capital at the new capital structure? The borrowing rate is 5.75% and the tax rate is 21%. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Weighted-average cost of capitalThe calculation of WACC involves calculating the weighted average of the required rates of return on debt, preferred stock, and common equity, where the weights equal the percentage of each type of financing in the firm’s overall capital structure. Q1. ________is the symbol that represents the cost of preferred stock in the weighted average cost of capital (WACC) equation. Q2. Avery Co. has $3.9 million of debt, $2 million of preferred stock, and $2.2 million of common equity. What would be its weight on debt? a. 0.27 b. 0.25 c. 0.48 d. 0.20 Q1. Option 1 rS or Option 2 rD or Option 3 rP or Option 4 rE Please provide the correct answers. Thank you!