The total book value of WTC's equity is $12 million, and book value per share is $24. The stock has a market-to-book ratio of 1.5, andthe cost of equity is 14%. The firm's bonds have a face value of $8 million and sell at a price of 110% of face value. The yield to maturityon the bonds is 9%, and the firm's tax rate is 21%. What is the company's WACC?Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.WACC%

Step 1:We have to calculate the weighted average cost of capital (WACC).The formula of WACC:WACC =…

Answered: The total book value of WTC's equity is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The total book value of WTC’s equity is $10 million, and book value per share is $16. The stock has a market-to-book ratio of 1.5, and the cost of equity is 13%. The firm’s bonds have a face value of $6 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 9%, and the firm’s tax rate is 21%. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The total book value of the firm's equity is $10 million, book value per share is $20. The stock sells for a price of $35 per share, and the cost of equity is 13%. The firm's bonds have a face value of $4 million and sell at a price of 120% of face value. The yield to maturity on the bonds is 7%, and the firm's tax rate is 35%. Find the WACC of William Tell Computers. (Do not round intermediate calculations. Round your answer to 2 decimal pleces.) WACC
The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)
Tell Corp. has a total book value of equity of $10 million and a book value per share of $20. The stock sells for a price of $30 per share, and the cost of equity is 15%. The firm's bonds have a par value of $5 million and sel at a price of 110% of par. The yield to maturity on the bonds is 9%, and the firms tax rate is 30%. What is the firms Weighted Average Cost of Capital? A. 11.91% B. 12.10% C. 12.67% D. 12.82 E. 13.30
The total book value of the firm’s equity is 15 million; the book value per share is 35. The stock sells for a price of 45 per share, and the cost of equity is 16 percent. The firm’s bonds have a par value of 8 million and sell at a price of 112 percent of par. The yield to maturity on the bonds is 8 percent, and the firm’s tax rate is 30 percent.Find the WACC of Pakistan State Oil Company?
A firm has issued $25 million in long-term bonds that now have 8 years remaining until maturity. The bonds carry a 9% annual coupon but are selling in the market for $891.50. The firm also has $40 million in market value of ordinary shares. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 28%?
Country Markets has an unlevered cost of capital of 12 percent, a tax rate of 38 percent, and expected earnings before interest and taxes of $15,700. The company has $12,000 in bonds outstanding that have a 6 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?
(12) The total book value of WTC's equity is $10 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 15%. The firm's bonds have a face value of $5 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 9%, and the firm's tax rate is 21%. What is the company's WACC?
Tomeco Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 6 percent, and its tax rate is 30 percent. Its cost of equity is 14 percent. What is Tomeco’s Equity/Total Assets ratio?
The total market value of the common stock of Company A is $12 million, and the total value of its debt is $8 million. The treasurer estimates that the beta of the stock is currently 1.20 and that the market risk premium is 7.5%. The Treasury bill rate is 2.5%. Assume for simplicity that Company A debt is risk-free. The Company's tax rate is 28% . a) What is the pre-tax cost of capital for Company A? b) What is the WACC for Company A ?
charlotte's crochet shoppe has 16,100 shares of common stock outstanding at a price per share of $81 and a rate of return of 11.85 percent. the company also has 340 bonds outstanding, with a par value of $2,000 per bond. the pretax cost of debt is 6.25 percent and the bonds sell for 99 percent of par. what is the firm's wacc if the tax rate is 21 percent?
ABC Inc. borrows money at 8%, sells bonds at 6%, and the purchasers of common stock require 11% rate of return. If the company has borrowed $40 million, sold $60 million in bonds, and sold $100 million worth of common stocks, what is the Weighted Average Cost of Capital (WACC)? If the same company from the previous question used 6% ROR for loans, 8% ROR for bonds, and 11% ROR for stocks, and also used a 50% tax rate, what is the WACC?

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