Your firm has a debt value of 458,105 and an equity value of 738,096. Your levered...

Your firm has a debt value of 458,105 and an equity value of 738,096. Your levered cost of equity is 0.15 and your cost of debt is 0.05. Your tax rate is 0.31. What is your weighted average cost of capital?

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jeff jeffy answered 2 years ago

Your firm has a debt value of 469,863 and an equity value of 861,755. Your levered...

Your firm has a debt value of 469,863 and an equity value of 861,755. Your levered cost of equity is 0.12 and your cost of debt is 0.06. Your tax rate is 0.35. What is your weighted average cost of capital?

For a levered firm, firm’s assets are financed by equity and debt. That is, ?? =...

For a levered firm, firm’s assets are financed by equity and debt. That is, ?? = ?? + ?? , where ?? ,?? & ?? represents asset value, debt value and equity value at time ?. Suppose the firm makes no dividend payment and has a zero-coupon debt maturing at time ?. At maturity, if the value of the company asset is greater than the maturity value of the debt (?? > ??), the company will simply pay off the...

A firm has debt-equity ratio of 1 (i.e. the value of the debt divided by the...

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...

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...

A firm has a debt-to-value ratio of 1/3. It has only debt and equity in its...

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%

Problem 10 A firm has market value of equity of $10M and market value of debt...

Problem 10 A firm has market value of equity of $10M and market value of debt of $10M. Yield to maturity of its debt is 10%, while the expected return of its stock is 20%. Assume that the tax rate is 0%. The WACC is given by: A) 8% B) 12% C) 15% D) 18% E) 21%

An unlevered firm has a value of $900 million. An otherwise identical but levered firm has...

An unlevered firm has a value of $900 million. An otherwise identical but levered firm has $70 million in debt at a 4% interest rate, which is its pre-tax cost of debt. Its unlevered cost of equity is 11%. After Year 1, free cash flows and tax savings are expected to grow at a constant rate of 3%. Assuming the corporate tax rate is 25%, use the compressed adjusted present value model to determine the value of the levered firm....

1- Your firm is has equity of $2,460,000.00 and debt of $1,480,000.00 and the cost of...

1- Your firm is has equity of $2,460,000.00 and debt of $1,480,000.00 and the cost of the equity is 11.70% and the cost of the debt is 6.60%. Given that the tax rate is 15.00%, what is your firm's weighted average cost of capital (WACC)? (enter your value as a percent (i.e. 20.5 for 20.5%) tolerance is 0.1) 2- Your firm is has equity of $2,270,000.00 and debt of $4,060,000.00. The firm has been estimate to have a beta of...

ABC Corp. debt is P15 million and has an equity of P5 million. Its historical levered...

ABC Corp. debt is P15 million and has an equity of P5 million. Its historical levered equity beta has been 2. If the firm were to increase its leverage from P15 million to P18 million and use the cash to repurchase shares, what would you expect its levered equity beta to be

a firm has total debt of $900 an total equity of $1600. the cost of debt...

a firm has total debt of $900 an total equity of $1600. the cost of debt is 10% and the unlevered rate of return is 13%. The tax rate is 34%. What is the cost equity? A) 14.69% B)14.11% C) 13.88% D)12.29% E) 12.69%

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