Question

In: Finance

Mullineaux Corporation has a target capital structure of 75 percent common stock and 25 percent debt....

Mullineaux Corporation has a target capital structure of 75 percent common stock and 25 percent debt. Its cost of equity is 11.5 percent, and the cost of debt is 6.2 percent. The relevant tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

Ans 9.79%

Investment Tax Cost After Tax Cost Average Cost
Common Stock                                                           75 11.50% 11.50%                          8.63
Debt                                                           25 6.20% 4.65%                          1.16
                                                        100 Total Cost                          9.79

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock,...
Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock, and 55 percent debt. Its cost of equity is 19 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 7.5 percent. What is the firm's WACC given a tax rate of 34 percent? A. 13.38 percent B. 10.77 percent C. 10.43 percent D. 9.87 percent
5 Mullineaux Corporation has a target capital structure of 55 percent common stock and 45 percent...
5 Mullineaux Corporation has a target capital structure of 55 percent common stock and 45 percent debt. Its cost of equity is 12.6 percent, and the cost of debt is 7.3 percent. The relevant tax rate is 21 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
            Cita Company’s target capital structure is 40 percent debt, 50 percent common stock, and 10...
            Cita Company’s target capital structure is 40 percent debt, 50 percent common stock, and 10 percent preferred stock. Information regarding the company’s cost of capital can be summarized as follows: Company sold a non-callable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,025, and has a par value of $1,000. The company’s preferred stock currently sells for $81.88 per share, and it...
King Fisher Aviation has a target capital structure of 72 percent common stock and 28 percent...
King Fisher Aviation has a target capital structure of 72 percent common stock and 28 percent debt. Their cost of equity is 12 percent and the cost of debt is 5 percent. The tax rate is 40 percent King Fisher Aviation issued a 25 year, 6.8 percent semiannual bond 8 years ago. The bond sells today for 110 percent of its face value. The tax rate is 40%. Evaluate King Fisher's target capital structure. What are your recommendations? Consider the...
Evans Technology has the following capital structure. Debt 25 % Common equity 75 The aftertax cost...
Evans Technology has the following capital structure. Debt 25 % Common equity 75 The aftertax cost of debt is 7.00 percent, and the cost of common equity (in the form of retained earnings) is 14.00 percent. a. What is the firm’s weighted average cost of capital? (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)    An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to...
The firm’s target capital structure is 60% common stock, 30% debt, and 10% preferred stock. Debt:...
The firm’s target capital structure is 60% common stock, 30% debt, and 10% preferred stock. Debt: 7,000 5.0% coupon bonds outstanding, with 11 years to maturity, $1,000 par value and a quoted price of 106.25% of par value. These bonds pay interest semiannually. Common Stock: 300,000 shares of common stock selling for $65.40 per share. The stock has a beta of 1.44. Preferred Stock: 8,500 shares of preferred stock selling at $96.00 per share and pay annual dividends of $5.70....
Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with...
Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is P0 = $31.50. The last dividend was D0 = $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your...
Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with...
Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 25%. The current stock price is P0 = $22.50. The last dividend was D0 = $2.50, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 8%, and its marginal tax rate is 40%. The current stock price is P0$22.00. The last dividend was D0$2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC?
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with...
Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 40%. The current stock price is P0 = $28.50. The last dividend was D0 = $3.00, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT