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​Hurggasky, Inc.'s balance sheet is shown as​ follows: Cash: 460,000 Accounts receivable: 4,080,000 Inventories: 7,900,000 Long-term...

​Hurggasky, Inc.'s balance sheet is shown as​ follows:

Cash: 460,000

Accounts receivable: 4,080,000

Inventories: 7,900,000 Long-term debt: 11,140,000

Net property, plant, and equipment: 19,146,000 Common equity: 20,446,000

Total assets:31,586,000 Total debt and equity: 31,586,000

.Currently the price of the​ company's common stock is selling at a price the same as its book​ value, and the​ company's bonds are selling at par. The​ market's required rate of return for its stock is estimated to be

19 percent. The yield to maturity of the​ Hurggasky's bonds is 9 ​percent, and the​ company's corporate tax rate is 27 percent.

Answer the following questions.

a. ​Hurggasky's weighted average cost of capital will be​ ________.

b. What would the​ firm's cost of capital be if the​ company's cost of equity to drop to 17 percent​ (assuming there is no change on the cost of debt and tax​ rate)?

c. If Hurggasky buy another equipment​ company, the appropriate cost of capital for this buyout project would be its ________ cost of capital.

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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