Question

In: Finance

Calculate the cost of capital for Odorf Inc. given the following information. Common equity: Number of...

Calculate the cost of capital for Odorf Inc. given the following information. Common equity: Number of shares outstanding = 1 million
Share Price = $1.50
Beta = 1.5

Debt:
Number of bonds = 1,000
Bond price = $948.54
Coupon rate = 10% paid annually
Maturity = 8 years
T-bill rate = 5%
Market return = 16%
Marginal tax rate = 0.35

Solutions

Expert Solution

Please upvote if the ans is helpful. In case of doubt,do comment. Thanks.


Related Solutions

Given the following information: Percent of capital structure: Debt 35 % Preferred stock 20 Common equity...
Given the following information: Percent of capital structure: Debt 35 % Preferred stock 20 Common equity 45 Additional information: Bond coupon rate 15% Bond yield to maturity 12% Dividend, expected common $ 2.00 Dividend, preferred $ 9.00 Price, common $ 45.00 Price, preferred $ 148.00 Flotation cost, preferred $ 6.20 Growth rate 6% Corporate tax rate 35% Calculate the Hamilton Corp.'s weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations....
Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings)...
Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings) 50 Debt 30 Additional information: Corporate tax rate 40 % Dividend, preferred $ 7.00 Dividend, expected common $ 3.50 Price, preferred $ 98.00 Growth rate 8 % Bond yield 10 % Flotation cost, preferred $ 3.40 Price, common $ 86.00 Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to...
Given the following information. Percent of capital structure: Debt 10 % Preferred stock 5 Common equity...
Given the following information. Percent of capital structure: Debt 10 % Preferred stock 5 Common equity 85 Additional information: Bond coupon rate 13 % Bond yield 11 % Dividend, expected common $7.00 Dividend, preferred $14.00 Price, common $70.00 Price, preferred $110.00 Flotation cost, preferred $2.50 Corporate growth rate 4 % Corporate tax rate 30 % Calculate the weighted average cost of capital for Genex Corporation. Line up the calculations in the order shown in Table 11-1. (Do not round your...
Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings)...
Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings) 40 Debt 40 Additional information:      Corporate tax rate 24 % Dividend, preferred $ 8.50 Dividend, expected common $ 2.50 Price, preferred $ 105.00 Growth rate 7 % Bond yield 9.5 % Flotation cost, preferred $ 3.60 Price, common $ 75.00 Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded...
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 60% common...
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $9 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 12%, a before-tax cost of debt of 10%, and a tax rate of 40%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $2, and the current stock price is $29....
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 60% common...
WACC AND COST OF COMMON EQUITY Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $9 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 13%, a before-tax cost of debt of 9%, and a tax rate of 40%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $2, and the current stock price is $24....
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate...
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate calculations to 2 decimal places. Round the final answers to 2 decimal places.)   Percent of capital structure:     Debt 40%     Preferred stock 40        Common equity 20      Additional information:     Bond coupon rate 8.5%     Bond yield 6.25%     Bond flotation cost 2%     Dividend, expected common $1.50        Price, common $30.00        Dividend, preferred 6%       Flotation cost, preferred 3%     Flotation cost, common 4.00%     Corporate growth rate 6%       Corporate tax...
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate...
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate calculations to 2 decimal places. Round the final answers to 2 decimal places.) Percent of capital structure: Debt 45% Preferred stock 30 Common equity 25 Additional information: Bond coupon rate 8.5% Bond yield 7.50% Bond flotation cost 2% Dividend, expected common $1.50 Price, common $30.00 Dividend, preferred 7% Flotation cost, preferred 3% Flotation cost, common 4.00% Corporate growth rate 5% Corporate tax rate 35%...
1. Calculate the weighted average cost of capital for a company given the following information: Risk-free...
1. Calculate the weighted average cost of capital for a company given the following information: Risk-free rate in the U.S.: 4% Expected return on the U.S. market portfolio: 14% Company’s risk relative to the market risk: 0.9 The company has 2-year, 12% bonds (paid semi-annually), face value of $1,000, selling for $1095.73. The company’s marginal tax rate: 35% The company finances 38% of its capital by debt and 62% by common equity. 2. Calculate the weighted average cost of capital...
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate...
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate calculations to 2 decimal places. Round the final answers to 2 decimal places.)   Percent of capital structure:     Debt 45%     Preferred stock 30        Common equity 25      Additional information:     Bond coupon rate 8.5%     Bond yield 7.75%     Bond flotation cost 2%     Dividend, expected common $1.50        Price, common $30.00        Dividend, preferred 6%       Flotation cost, preferred 3%     Flotation cost, common 4.00%     Corporate growth rate 6%       Corporate tax...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT