HomeworkLib
Question

A firm has only two funding sources, debt and equity. Their percentage of debt is 19%....

A firm has only two funding sources, debt and equity. Their percentage of debt is 19%. Their tax rate is 21.2% and their pretax cost of debt is 4.01%. If the required return on their equity is 9.19%, then what is their weighted average cost of capital? State your answer as a percentage with two decimal places and not in decimal form (i.e. 13.21 not .1321)

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Market value WACC (Cost %*Weights) Cost % Weight Cost of equity 9.19% $ 81 0.8100 7.44% Debt (After tax cost) $ 19 0.1900 0.6

*Please rate thumbs up

0 0
Add a comment
Know the answer?
Add Answer to:
A firm has only two funding sources, debt and equity. Their percentage of debt is 19%....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A firm has a market capitalization (market value of equity) of $19 Billion and net debt...

    A firm has a market capitalization (market value of equity) of $19 Billion and net debt of $11 Billion. Calculate the weight of equity in the firm's weighted average cost of capital (WACC) calculation. [Note: Enter your answer as a percentage rounded to two decimal places.]

  • A firm has a market capitalization (market value of equity) of $16 Billion and net debt of $12 Billion

    Question 11A firm has a market capitalization (market value of equity) of $16 Billion and net debt of $12 Billion. Calculate the weight of debt in the firm's weighted average cos of capital (WACC) calculation. (Note: Enter your answer as a percentage rounded to two decimal places.] Question 12A firm has an effective (after-tax) cost of debt of 3%, and its weight of debt is 40%. Its equity cost of capital is 9%, and its weight of equity is 60%. Calculate...

  • Consider a firm that has 21% of debt. The rate of return for debt is 10%...

    Consider a firm that has 21% of debt. The rate of return for debt is 10% and the rate of return for equity is 14%. The corporate tax rate is 37%. What is the weighted average cost of capital? Enter your answer as a percentage and rounded to 2 DECIMAL PLACES.

  • Consider a firm that has a debt-equity ratio of 1. The rate of return for debt...

    Consider a firm that has a debt-equity ratio of 1. The rate of return for debt is 6% and the rate of return for equity is 11%. The corporate tax rate is 34%. What is the weighted average cost of capital?

  • Consider a firm that has 30% of debt. The rate of return for debt is 5%...

    Consider a firm that has 30% of debt. The rate of return for debt is 5% and the rate of return for equity is 11%. The corporate tax rate is 38%. What is the weighted average cost of capital? Enter your answer as a percentage and rounded to 2 DECIMAL PLACES. Do not include the percentage sign in your answer. Enter your response below. %

  • answer second part of question below A firm currently has a debt-equity ratio of 0.4. The...

    answer second part of question below A firm currently has a debt-equity ratio of 0.4. The debt, which is virtually riskless, pays an interest rate of 5%. The expected rate of return on the equity is 10 %. What is the Weighted Average Cost of Capital if the firm pays no taxes? Enter your answer as a percentage rounded to two decimal places. Do not include the percentage sign in your answer. WACC = 8.57 Correct response: 8.57+0.02 What would...

  • A firm has an effective (after-tax) cost of debt of 5%, and its weight of debt...

    A firm has an effective (after-tax) cost of debt of 5%, and its weight of debt is 40%. Its equity cost of capital is 12%, and its weight of equity is 60%. Calculate the firm's weighted average cost of capital (WACC). [Enter your answer as a percentage rounded to two decimal places.]

  • A firm has an effective (after-tax) cost of debt of 3%, and its weight of debt...

    A firm has an effective (after-tax) cost of debt of 3%, and its weight of debt is 40%. Its equity cost of capital is 9%, and its weight of equity is 60%. Calculate the firm's weighted average cost of capital (WACC). [Enter your answer as a percentage rounded to two decimal places.]

  • A firm has an effective (after-tax) cost of debt of 3%, and its weight of debt...

    A firm has an effective (after-tax) cost of debt of 3%, and its weight of debt is 40%. Its equity cost of capital is 9%, and its weight of equity is 60%. Calculate the firm's weighted average cost of capital (WACC). [Enter your answer as a percentage rounded to two decimal places.]

  • Your firm is 76% equity financed. You have a cost of debt of 3.8, a cost...

    Your firm is 76% equity financed. You have a cost of debt of 3.8, a cost of equity of 18.7, and a tax rate of 17. What is your firm's weighted average cost of capital? {enter your number as a percentage to two decimal places.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT