Question
In: Finance
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 tax rate of 40%?
(Round to two decimal places.)
What is the book value adjusted WACC for Clark Explorers at a tax rate of 40%?
(Round to two decimal places.)
b. What is the market value adjusted WACC for Clark Explorers at a tax rate of 30%?
(Round to two decimal places.)
What is the book value adjusted WACC for Clark Explorers at a tax rate of 30%?
(Round to two decimal places.)
c.What is the market value adjusted WACC for Clark Explorers at a tax rate of 15%?
(Round to two decimal places.)
What is the book value adjusted WACC for Clark Explorers at a tax rate of 15%?
(Round to two decimal places.)
d. What is the market value adjusted WACC for Clark Explorers at a tax rate of 10%?
(Round to two decimal places.)
What is the book value adjusted WACC for Clark Explorers at a tax rate of 10%?
(Round to two decimal places.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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%
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%
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: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...
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WACC AND COST OF COMMON EQUITY
Kahn Inc. has a target capital structure of 60% common equity
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Furthermore, Kahn Inc. has a WACC of 12%, a before-tax cost of debt
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Kahn Inc. has a target capital structure of 60% common equity
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Furthermore, Kahn Inc. has a WACC of 13%, a before-tax cost of debt
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The firm has one outstanding 16.92% bond issue that matures on
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Using debt and preferred stock in the capital structure of a firm will _____. decrease business...
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firm will _____.
decrease business risk
increase the book value of common stock
increase the tax payable by the firm.
increase financial risk
decrease operating leverage
The firm's target capital structure is the mix of debt, preferred stock, and common equity the...
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(WACC). If the firm will not have to issue new common stock, then
the cost of retained earnings is used in the firm's WACC
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