A company has $400 million worth of debt outstanding with an average interest rate of 5%...

A company has $400 million worth of debt outstanding with an average interest rate of 5% and 50 million common shares outstanding worth $12 each. The company’s tax rate is 34%, beta is 1.2, the yield on 10-year Treasury notes is 1.5% and the expected market return is 9.5%. What is the company’s weighted average cost of capital (WACC) based on the current weights for debt and common stock in its capital structure?

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jeff jeffy answered 2 years ago

Question 1 A company has $400 million worth of debt outstanding with an average interest rate...

Question 1 A company has $400 million worth of debt outstanding with an average interest rate of 5% and 50 million common shares outstanding worth $12 each. The company’s tax rate is 28%, beta is 1.3, the yield on 10-year Treasury notes is 1.5% and the expected market return is 9.5%. What is the company’s weighted average cost of capital (WACC) based on the current weights for debt and common stock in its capital structure? a. 7.98% b. 8.10% c....

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A company has 5.56 million common shares outstanding and $65 million of debt with an interest...

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Your firm currently has $ 92 million in debt outstanding with a 9 % interest rate....

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Your firm currently has $ 52 million in debt outstanding with a 10 % interest rate....

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Your firm currently has $ 116 million in debt outstanding with a 9 % interest rate. The terms of the loan require the firm to repay $ 29 million of the balance each year. Suppose that the marginal corporate tax rate is 35 % , and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt?

Pixel Animations has $6 million debt outstanding with 7% interest rate. The firm’s tax rate is...

Pixel Animations has $6 million debt outstanding with 7% interest rate. The firm’s tax rate is 35%. What is the annual tax shield for Pixel Animation?

Mercer Corp. has 10 million shares outstanding and $147 million worth of debt outstanding. Its current...

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Your firm currently has $84 million in debt outstanding with a 8% interest rate. The terms...

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Your firm currently has $116 million in debt outstanding with a 9% interest rate. The terms...

Your firm currently has $116 million in debt outstanding with a 9% interest rate. The terms of the loan require the firm to pay $29 million of the balance each year. Suppose that the marginal corporate tax rate is 40% and that the interest tax shields have the same risk as the loan. What is the present value of the interest shields from this debt? *****please show work*****

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