Question
In: Finance
Clark Explorers, Inc., an engineering firm, has the following capital structure:Using market value and book value...
Clark Explorers, Inc., an engineering firm, has the following capital structure:Using market value and book value (separately, of course), find the adjusted WACC for Clark Explorers at the following tax rates
| Equity | Preferred Stock | Debt | |
| Market Price | $30.00 | $110.00 | $955.00 |
| Outstanding units | 120000 | 10000 | 6000 |
| Book value | $3,000,000 | $1,000,000 | $6,000,000 |
| Cost of capital | 15.00% | 12.00% | 9.0% |
a What is the market value adjusted WACC for Clark Explorers at a tax rate of 35%?
b What is the market value adjusted WACC for Clark Explorers at a tax rate of 25%?
c What is the market value adjusted WACC for Clark Explorers at a tax rate of 15%?
d What is the market value adjusted WACC for Clark Explorers at a tax rate of 5%?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Clark Explorers, Inc., an engineering firm, has the following capital structure: LOADING... . Using market value...
Clark Explorers, Inc., an engineering firm, has the following
capital structure:
LOADING...
. Using market value and book value (separately, of course),
find the adjusted WACC for Clark Explorers at the following tax
rates:a.
35%
b.
25%
c.
15%
d.
5%
a. What is the market value adjusted WACC for Clark Explorers
at a tax rate of
35%?
nothing%
(Round to two decimal places.)
q2.
Grey's Pharmaceuticals has a new project that will require
funding of
$4.04.0
million. The...
Clark? Explorers, Inc., an engineering? firm, has the following capital? structure: Numbers in order of: Equity,...
Clark? Explorers, Inc., an engineering? firm, has the following
capital? structure:
Numbers in order of: Equity, Preferred Stock, Debt
Market Price: $63.06 $107.29 $1064.54
Outstanding units: 127,000 11,000 6,868
Book value: $2,734,000 $1,182,000 $6,868,000
Cost of capital: 18.04% 12.68% 10.8%
Using market value and book value? (separately, of? course),
find the adjusted WACC for Clark Explorers at the following tax?
rates:
A. 35%
B. 25%
C. 15%
D. 10%
Adjusted WACC. Clark Explorers, Inc., an engineering firm, has the following capital structure: Equity Preferred Stock...
Adjusted WACC. Clark Explorers, Inc., an engineering firm, has
the following capital structure:
Equity
Preferred Stock
Debt
Market Price
$66.75
$192.68
$1045.55
Outstanding units
104,000
6,000
6,667
Book value
$2,799,000
$1,125,000
$6,667,000
Cost of capital
15.74%
11.12%
9.1%
Using market value and book value (separately, of course),
find the adjusted WACC for Clark Explorers at the following tax
rates:
a. 40%
b. 30%
c. 15%
d. 10%
a. What is the market value adjusted WACC for Clark Explorers at
a...
Adjusted WACC. Clark Explorers, Inc., an engineering firm, has the following capital structure: Equity Preferred Stock...
Adjusted
WACC.
Clark Explorers, Inc., an engineering firm, has the
following capital structure:
Equity
Preferred Stock
Debt
Market Price
$56.14
$101.55
$954.28
Outstanding units
120,000
14,000
5,825
Book value
$3,305,000
$1,438,000
$5,825,000
Cost of capital
15.81%
12.01%
10.9%
. Using market value and book value (separately, of course),
find the adjusted WACC for Clark Explorers at the following tax
rates:
a.35%
b.30%
c.15%
d.10%
Promo Pak has compiled the following financial data: Source of Capital Book Value Market Value Cost...
Promo Pak has compiled the following financial data: Source of
Capital Book Value Market Value Cost Long-term debt $ 10,000,000 $
12,000,000 6.0% Preferred stock 1,000,000 1,200,000 12.0 Common
stock equity 12,000,000 15,000,000 15.0 ------------ ------------
$23,000,000 $28,200,000 a. Calculate the weighted average cost of
capital using book value weights. b. Calculate the weighted average
cost of capital using market value weights.
A firm has the following capital structure: Bonds with market value of $3,000,000 Preferred Stock with...
A firm has the following capital structure:
Bonds with market value of $3,000,000
Preferred Stock with a market value of $2,000,000
Common stock, of which 400,000 shares is outstanding.
Presently, each common stock is selling at $30 per share
The preferred stock price per share is $60 and pays a $5
dividend. Common stock shares sell for $30 and pay a $2 dividend.
Dividends for common stock are expected to grow by 3%. Bond price
is $950, and the bond...
A consulting engineering firm is trying to decide whether it should purchase Ford Explorers or toyota...
A consulting engineering firm is trying to decide whether it
should purchase Ford Explorers or toyota 4runners for company
principals. The models under consideration would cost $29,000 for
the Ford and $32,000 for the Toyota. The annual operating cost of
the explorer is expected to be $200 per year less than that of the
4runner. The trade in values after 3 years are estimated to be 50%
of first cost for the explorer and 60% for the Toyota. If the...
10-EZ Way has a market value equal to its book value. Currently, the firm has excess...
10-EZ Way has a market value equal to its book value.
Currently, the firm has excess cash of $1,332, other assets of
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and net income of $838.EZ Way has decided to spend one-third of its
excess cash on a share repurchase program. How many shares of stock
will be outstanding after the stock repurchase is
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A firm has the following capital structure: £240 million of equity (market value), trading at £2.4...
A firm has the following capital structure: £240 million of
equity (market value), trading at £2.4 per share, and £160 million
of debt. The beta of the firm’s stock is 1.5. The firm’s cost of
equity is 10 percent, and the expected return on the market
portfolio is 7 percent. There is no tax. Assuming that the firm can
borrow at the risk free rate and that both CAPM (Capital Asset
Pricing Model) and the Modigliani-Miller theorem hold, answer the...
A firm has the following capital structure: 1. Bonds with market value of $3,000,000 2. Preferred...
A firm has the following capital structure: 1. Bonds with market
value of $3,000,000 2. Preferred Stock with a market value of
$2,000,000 3. Common stock, of which 400,000 shares is outstanding.
Presently, each common stock is selling at $30 per share The
preferred stock price per share is $60 and pays a $5 dividend.
Common stock shares sell for $30 and pay a $2 dividend. Dividends
for common stock are expected to grow by 3%. Bond price is $950,...
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