The farm has a dent to quit a ratio of .5 the cost of equity is...

The farm has a dent to quit a ratio of .5 the cost of equity is 22% and it's cost of the debt is 16% if the corporate tax rate is .40 what what is cost of equity be if the debt to equity ratio were

zero

Expert Solution

Cost of Equity is the return that a shareholder or investor expect from the equity investment in the business. This cost of equity is calculated by two methods one is Capital Asset Pricing Model(CAPM) and other method is dividend capitalization model.The cost of equity is also known as rate of return to shareholder.

ekkarill92 answered 11 months ago

JohnSmith maintains a debt-equity ratio of 0.85, and has an equity cost of capital of 12%...

JohnSmith maintains a debt-equity ratio of 0.85, and has an equity cost of capital of 12% and a debt cost of capital of 7%. The corporate tax rate is 40%, and its market capitalization is $220 million. a. If JohnSmith cash flow is expected to be $10 million in one year, what constant expected future growth rate is consistent with the firm’s current market value? b. Compute the value of interest tax shield

Young & Creative Inc. has a debt-equity ratio of 0.70. The cost of equity is 15...

Young & Creative Inc. has a debt-equity ratio of 0.70. The cost of equity is 15 percent and the aftertax cost of debt is 5 percent. What will the firm's cost of equity be if the debt-equity ratio is revised to 0.80? 10.89 percent 11.47 percent 11.70 percent 13.89 percent 15.59 percent

Restex has a debt-equity ratio of 0.76, an equity cost of capital of 18 %, and a debt cost of capital of 9 %.

Restex has a debt-equity ratio of 0.76, an equity cost of capital of 18 %, and a debt cost of capital of 9 %. Restex's corporate tax rate is 30%, and its market capitalization is $ 199 million. a. If? Restex's free cash flow is expected to be $5 million one year from now and will grow at a constant? rate, what expected future growth rate is consistent with?Restex's current market? value? b. Estimate the value of Restex's interest tax...

Fiat Inc. has a target debt-equity ratio of 0.52. The cost of floating equity is 4.75...

Fiat Inc. has a target debt-equity ratio of 0.52. The cost of floating equity is 4.75 percent and the flotation cost of debt is 3.3 percent. The firm’s tax rate is 24 percent. What should the firm use as their weighted average flotation cost? A. 4.25% B. 4.05% C. 4.00% D. 3.50%

A firm has a cost of equity of 13 percent, a cost of preferred of 5...

A firm has a cost of equity of 13 percent, a cost of preferred of 5 percent, an after-tax cost of debt of 3.4 percent and a tax rate of 21%. Given this, which of the following will increase the firm’s weighted average cost of capital? Increase the firm’s tax rate Issuing new bonds at par Increasing the firm’s beta Increasing the debt/equity ratio

Sixx AM Manufacturing has a target debt—equity ratio of 0.52. Its cost of equity is 16...

Sixx AM Manufacturing has a target debt—equity ratio of 0.52. Its cost of equity is 16 percent, and its cost of debt is 11 percent. If the tax rate is 34 percent, what is the company's WACC?

What is debt-to-equity ratio (ratio of liabilities to stockholder’s equity)? What are product cost vs. period...

What is debt-to-equity ratio (ratio of liabilities to stockholder’s equity)? What are product cost vs. period cost? What is the schedule of cost of goods manufactured?

Williamson, Inc., has a debt−equity ratio of 2.40. The company'sweighted average cost of capital is...

Williamson, Inc., has a debt−equity ratio of 2.40. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is 5 percent. The corporate tax rate is 30 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations....

Question 9. A. Marble Paving Ltd. has a debt equity ratio of 1.5. The cost of...

Question 9. A. Marble Paving Ltd. has a debt equity ratio of 1.5. The cost of debt is 8% and the cost of unlevered equity is 14%. Calculate the weighted average cost of capital for the firm if the tax rate is 33%. Briefly summarise the advantages of using the WACC to evaluate a project. [5 marks] B. Suppose Shee SuperSteel Products conducts a study and concludes that if SSP significantly expanded its consumer products division (which is less risky...

If a company has a debt to equity ratio of 1.3, then the equity multiplier is...

If a company has a debt to equity ratio of 1.3, then the equity multiplier is approximately: 1. 2.3 2. 1.3 3. 2.6

Question