Targaryen Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 10 percent, the cost of preferred stock Is 5 percent, and the pretax cost of debt Is 6 percent. The relevant tax rate is 22 percent. a. What is the company's WACC? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What Is the aftertax cost of debt? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. WACC % b. Cost of debt
Targaryen Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 10 percent, the cost of preferred stock Is 5 percent, and the pretax cost of debt Is 6 percent. The relevant tax rate is 22 percent. a. What is the company's WACC? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What Is the aftertax cost of debt? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. WACC % b. Cost of debt
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 64P: Albion Inc. provided the following information for its most recent year of operations. The tax rate...
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![Targaryen Corporation has a target capital structure of 60 percent common stock, 5
percent preferred stock, and 35 percent debt. Its cost of equity Is 10 percent, the cost of
preferred stock Is 5 percent, and the pretax cost of debt is 6 percent. The relevant tax
rate is 22 percent.
a. What is the company's WACC? (Do not round Intermedlate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the aftertax cost of debt? (Do not round Intermedlate calculatlons and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a.
WACC
b. Cost of debt
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7f57acd-42b9-466e-a85d-4609f38f005a%2Fe4ce6486-593e-4ec7-8e93-c631b0b1d129%2Fo2x5bdl_processed.png&w=3840&q=75)
Transcribed Image Text:Targaryen Corporation has a target capital structure of 60 percent common stock, 5
percent preferred stock, and 35 percent debt. Its cost of equity Is 10 percent, the cost of
preferred stock Is 5 percent, and the pretax cost of debt is 6 percent. The relevant tax
rate is 22 percent.
a. What is the company's WACC? (Do not round Intermedlate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the aftertax cost of debt? (Do not round Intermedlate calculatlons and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a.
WACC
b. Cost of debt
%
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