A firm has debt-equity ratio of 1 (i.e. the value of the debt
divided by the value of the equity euqals one). The beta of the
equity is 1.2 and the beta of the debt is 0.1. The risk free rate
is 5% and the return on the market index is 10%. What is the WACC
(weighted average cost of capital) for the firm?
Suppose the firm above increases its borrowing so that the
debt-equity ratio is 2. The recapitalization...
A firm has a debt-equity ratio of 4. The market value of the
firm’s debt and equity is £5m. What is the value of the firm’s
debt?
A: £4.0m
B: £3.8m
C: £4.5m
D: £2.6m
A firm has a debt-equity ratio of 4. The cost of debt capital
is 8% and the cost of equity capital is 12%. What is the weighted
average cost of capital for the firm (WACC)?
A: 10.1%
B: 8.8%
C: 9.5%
D: 9.2%
Suppose Modigliani-Miller...
Question: Computing the debt to equity ratio
Jackson Corporation has the following amounts as of December 31, 2018.
Total assets $ 55,250
Total liabilities 22,750
Total equity 32,500
Compute the debt to equity ratio on December 31, 2018.
A firm has a debt-to-value ratio of 1/3. It has only debt and
equity in its capital structure. Its before tax cost of debt is 9%
and the after tax weighted average cost of capital (WACCAT) is 12%.
What is the firm’s cost of equity if the tax rate for the firm is
35%?
16.050%
15.075%
none of these
18.000%
9.000%
Calculate the value of short-term debt given the following
information: total debt = $320,000; debt/equity ratio = 0.80;
long-term debt ratio = 0.3750.
Select one:
a. 85000
b. 65000
c. 70000
d. 80000
e. 75000