Question
In: Finance
Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of...
Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 35 percent, and expected earnings before interest and taxes of $1,500. The company has $2,700 in bonds outstanding that have an 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?
Solutions
jeff jeffy answered 6 months agoRelated Solutions
Country Markets has an unlevered cost of capital of 11.45 percent, a tax rate of 35...
Country Markets has an unlevered cost of capital of 11.45
percent, a tax rate of 35 percent, and expected earnings before
interest and taxes of $18,700. The company has $11,000 in bonds
outstanding that have an 8 percent coupon and pay interest
annually. The bonds are selling at par value. What is the value of
WACC?
XYZ Co. has an unlevered cost of capital of 20%, a tax rate of 20% percent,...
XYZ Co. has an unlevered cost of capital of 20%, a tax rate of
20% percent, and expected earnings before interest and taxes of
$400,000 (in perpetuity). The company has outstanding bonds with a
market value of $1 million, and a yield of 6%. What is the cost of
equity?
A. 15.64%
B. 16.42%
C. 25.12%
D. 38.67%
E. none of the above
Anderson's Furniture Outlet has an unlevered cost of capital of 10%, a tax rate of 34%,...
Anderson's Furniture Outlet has an unlevered cost of capital of
10%, a tax rate of 34%, and expected earnings before interest and
taxes of $1,600. The company has $3,000 in bonds outstanding that
have an 8% coupon and pay interest annually. The bonds are selling
at par value. What is the cost of equity?
a.
8.67%
b.
10.46%
c.
9.72%
d.
9.34%
e.
9.99%
Coffeez has expected EBIT of $21,300. It has an unlevered cost of capital of 14.2 percent,...
Coffeez has expected EBIT of $21,300. It has an unlevered cost
of capital of 14.2 percent, and debt with both a book and face
value of $113,200. The coupon rate of debt is 10.15 percent and the
tax rate is 21 percent. What is the value of this company?
Group of answer choices
184,356
176,002
139,555
142,272
154,260
An unlevered firm has a cost of capital of 13.6 percent and earnings before interest and...
An unlevered firm has a cost of capital of 13.6 percent and
earnings before interest and taxes of $138,000. A levered firm with
the same operations and assets has both a book value and a face
value of debt of $520,000 with an annual coupon of 7 percent. The
applicable tax rate is 21 percent. What is the value of the levered
firm? Multiple Choice
$996,421
$907,679
$1,184,929
$910,818
$1,191,506
An unlevered firm has a cost of capital of 13.6 percent and earnings before interest and...
An unlevered firm has a cost of capital of 13.6 percent and
earnings before interest and taxes of $138,000. A levered firm with
the same operations and assets has both a book value and a face
value of debt of $520,000 with an annual coupon of 7 percent. The
applicable tax rate is 21 percent. What is the value of the levered
firm?
The unlevered cost of capital is ____________ Select one: a. the cost of capital for a...
The unlevered cost of capital is ____________
Select one:
a.
the cost of capital for a firm with no debt in its capital
structure.
b.
the cost of capital for a firm with no equity in its capital
structure.
c.
the cost of preferred stock for a firm with equal parts debt and
common stock in its capital structure.
d.
the interest tax shield times pretax net income.
e.
equal to the profit margin for a firm with some debt...
1) Fama's Llamas has a weighted average cost of capital of 13 percent. The company's cost...
1) Fama's Llamas has a weighted average cost of capital of 13
percent. The company's cost of equity is 18 percent, and its pretax
cost of debt is 7.5 percent. The tax rate is 31 percent. What is
the company's target debt-equity ratio?
0.9091
0.6709
0.607
0.639
0.6645
2) Stock in Daenerys Industries has a beta of 1.14. The market
risk premium is 8.5 percent, and T-bills are currently yielding 4.5
percent. The company's most recent dividend was $1.7 per...
Fresno Industries is in the 21% corporate tax bracket. Its unlevered cost of capital is 10.5%....
Fresno Industries is in the 21% corporate tax bracket. Its
unlevered cost of capital is 10.5%. The company has a policy of
payout all of its earnings in dividends at the end of each year.
Fresno just issued $325,000 of perpetual 7 percent debt. With the
proceeds, it repurchased it stock. The company expects to generate
$146,000 of earnings before interest and taxes in perpetuity.
a. What is the value of the company as an unlevered firm?
b. Use the...
A firm with a 13 percent cost of capital is considering a project for this year’s...
A firm with a 13 percent cost of capital is considering a
project for this year’s capital budget. The project’s expected
after-tax cash flows are as follows:
Year:
0
1
2
3
4
Cash flow:
-$8,000
$3,100
$3,000
$2,700
$3,900
Calculate the project’s discounted payback
period.
a.
3.50 years
b.
4.00 years
c.
3.43 years
d.
3.57 years
e.
3.00 years
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