Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40 percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What is the weighted average flotation cost?
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- Financial Plan Components Cost Weights Weighted Cost A Debt 7.15% ? ? A Equity 5.15% 55% ? Weighted Average Cost of capital FIND B Debt 9.90% 60% ? B Equity 11.50% ? ? Weighted Average Cost of capital FIND C Debt 150000 7.15% ? ? C Equity 450000 5.15% ? ? Weighted Average Cost of capital FIND D Debt 300000 7.15% ? ? D Equity 300000 5.15% ? ? Weighted Average Cost of capital FIND Q1) Find Weighted Average capital for financial Plan C Q2) Find Weighted Average capital for financial Plan D Q3) Find Weighted Average capital for financial Plan A Q4) Find Weighted Average capital for financial Plan BWinter’s prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40 percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What is the weighted average flotation cost? a. 7.63 b. 5.46 c. 6.28 d. 6.49 e. 7.74Please answer all A company has days of inventory 80 days, days receivable of 30 days, and days payable of 90 days. Calculate the company’s funding gap. 3. Use your own words to explain the following: Weighted Average Cost of Capital (WACC): formula and what it measures Cost of Debt: formula and what it measures Capital Asset Pricing Model (CAPM): formula and what it measures
- D Question 7 Given are the following data: Cost of debt ro = 6%; Cost of equity = re = 12.1%; Marginal tax rate - 35%; and the firm has 50 percent debt and 50 percent equity. Calculate the after-tax weighted average cost of capital (WACC). O 7.1 percent 9 percent 8 percent O 5.9 percentIf the return on total assets is 10% and if the return on common stockholders'equity is 12% thena. The after-tax cost of long–term debt is probably greater than 10%.b. The after-tax cost of long–term debt is 12%.c. Leverage s negative.d. The after-tax cost of long–term debt is probably less than 10%Evans Technology has the following capital structure. Debt Common equity 35% 65 The aftertax cost of debt is 7.50 percent, and the cost of common equity (in the form of retained earnings) is 14.50 percent. a. What is the firm's weighted average cost of capital? Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Debt Common equity Weighted average cost of capital Weighted Cost % % An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. Under this new and more debt-oriented arrangement, the aftertax cost of debt is 8.50 percent, and the cost of common equity (in the form of retained earnings) is 16.50 percent. Debt Common equity Weighted average cost of capital b. Recalculate the firm's weighted average cost of capital. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal…
- A firm has two components in its capital structure, debt and equity. The after-tax cost of debt is 3% and the cost of equity is 11%. The proportion of equity in the capital structure is 75%. What is the firm's Weighted Average Cost of Capital? Select one: a. 9.47% b. 8.78% c. 9.00% d. 8.37%12 The Border Cafe has a cost of equity of 13.2 percent and a pretax cost of debt of 7.5 percent. The debt-equity ratio is 0.6 and the tax rate is 35 percent. What is the unlevered cost of capital?Assume the following data for U&P Company: Debt (D) = $100 million; Equity (E) = $300 million; rD = 6%; rE = 12%; and TC = 30%. Calculate the after-tax weighted average cost of capital (WACC): Multiple Choice A) 10.5% B) 10.05% C) 15% D) 9.45%
- Evans Technology has the following capital structure. Debt Common equity The aftertax cost of debt is 8.50 percent, and the cost of common equity (in the form of retained earnings) is 15.50 percent. a. What is the firm's weighted average cost of capital? Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. 48% 60 Debt Common equity Weighted average cost of capital Weighted Cost % % An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. Under this new and more debt-oriented arrangement, the aftertax cost of debt is 9.50 percent, and the cost of common equity (in the form of retained earnings) is 17.50 percent. b. Recalculate the firm's weighted average cost of canitalEvans Technology has the following capital structure. Debt Common equity 30% 70 The aftertax cost of debt is 7.50 percent, and the cost of common equity (in the form of retained earnings) is 14.50 percent. a. What is the firm's weighted average cost of capital? Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Debt Common equity Weighted average cost of capital Weighted Cost % 0.00 % Q Search An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. Under this new and more debt-oriented arrangement, the aftertax cost of debt is 8.50 percent, and the cost of common equity (in the form of retained earnings) is 16.50 percent. b. Recalculate the firm's weighted average cost of capital. O Che13. Using Weighted Average Cost of Capital (WACC) ignoring taxes compute the cost of capital of a company with debt ratio of 0.75:1 and is paying yearly average interest for its loans of 4% and dividend rate of 5% yearly. a) 4.00% b) 4.25% c) 4.5% d) 5.00% 14. Using capital Asset Pricing Method (CAPM) compute for the cost of capital (equity) with risk free rate of 5%, market return of 12% and Beta of 1.3. a) 14.01% b) 14.10% c) 14.00% d) 14.11% 15. Using capital Asset Pricing Method (CAPM) compute for the cost of capital (equity) with risk free rate of 4%, market return of 8% and Beta of 1.5. a) 10.00% b) 11.00% c) 12.00% d) 13.00%