WACC Comparables - 2 If it were unlevered, the overall firm beta for Wild Widgets Inc....

WACC Comparables - 2 If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 0.9. WWI has a target debt/equity ratio of 1. The expected return on the market is 0.15, and Treasury bills are currently selling to yield 0.03. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 9% and are selling for $958. The corporate tax rate is 35%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%)) a. WWI’s before-tax cost of debt is %. b. WWI’s cost of equity is %. c. WWI’s weighted average cost of capital is %.

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jeff jeffy answered 1 year ago

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.5....

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.5. WWI has a target debt/equity ratio of 0.2. The expected return on the market is 0.17, and Treasury bills are currently selling to yield 0.07. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 11% and are selling for $985.84. The corporate tax rate is 40%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%)) a....

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.7....

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.7. WWI has a target debt/equity ratio of 1. The expected return on the market is 0.08, and Treasury bills are currently selling to yield 0.06. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 2% and are selling for $925.52. The corporate tax rate is 35%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%)) a....

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.10. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.10. The company has a target debt-equity ratio of .75. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 3.6 percent. The company has one bond issue outstanding that matures in 29 years, a par value of $2,000, and a coupon rate of 6.3 percent. The bond currently sells for $2,100. The corporate tax rate is 22 percent. a. What...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1. The company has a target debt–equity ratio of .2. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 4.3 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 7.6 percent. The bond currently sells for $1,110. The corporate tax rate is 34 percent. What is the company’s cost of...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.85. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.85. The company has a target debt–equity ratio of .3. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 6 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 11 percent. The bond currently sells for $1,280. The corporate tax rate is 34 percent. a. What is the company's cost...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .90. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .90. The company has a target debt-equity ratio of .45. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 2.9 percent. The company has one bond issue outstanding that matures in 20 years, a par value of $1,000, and a coupon rate of 5.9 percent. The bond currently sells for $1,045. The corporate tax rate is 22 percent. a. What...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .95. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .95. The company has a target debt–equity ratio of .40. The expected return on the market portfolio is 11 percent, and Treasury bills currently yield 3.5 percent. The company has one bond issue outstanding that matures in 15 years and has a coupon rate of 6.5 percent. The bond currently sells for $1,080. The corporate tax rate is 21 percent. What is the company’s cost of...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.1. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.1. The company has a target debt–equity ratio of .5. The expected return on the market portfolio is 13 percent, and Treasury bills currently yield 3.5 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 8 percent. The bond currently sells for $1,130. The corporate tax rate is 34 percent. a. What is the company’s...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.75. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.75. The company has a target debt–equity ratio of .4. The expected return on the market portfolio is 9 percent, and Treasury bills currently yield 5.8 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 10.6 percent. The bond currently sells for $1,260. The corporate tax rate is 40 percent. a. What is the company’s cost...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.55. The...

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.55. The company has a target debt–equity ratio of .4. The expected return on the market portfolio is 9 percent, and Treasury bills currently yield 5.4 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 9.8 percent. The bond currently sells for $1,220. The corporate tax rate is 40 percent. a. What is the company’s...

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