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ACCT- Weighted average cost of capital Problems

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Question;1. (Related to Checkpoint 14.1) (Weighted average cost of capital) The target capital structure for QM Industries is 35% common stock, 12% preferred stock, and 53% debt. If the cost of common equity for the firm is 18.7%, the cost of preferred stock is 9.7%, the before-tax cost of debt is 8.4%, and the finn's tax rate is 35%, what is QMs weighted average cost of capital?QM's WACC is 0%. (Round to three decimal places.)2. (Weighted average cost of capital) Crypton Electronics has a capital structure consisting of 44% common stock and 56% debt. A debt issue of$1,000 par value, 6.1% bonds that mature in 15 years and pay annual interest will sell for $972. Common stock of the firm is currently selling for $29.86 per share and the firm expects to pay a $2.27 dividend next year. Dividends have grown at the rate of 5.3% per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the finn's tax rate is 30%?Crypton's cost of capital is 0 %. (Round to three decimal places.)3. (Weighted average cost of capital) The target capital structure for Jowers Manufacturing is 54% common stock, 11% preferred stock, and 35% debt stock. If the cost of common equity for the firm is 19.6%, the cost of preferred stock is 12.2%, and the beforetax cost of debt is 9.6%, what is Jowers' cost of capital? The firm's tax rate is 34%.4. (Related to Checkpoint 14.1) (Weighted average cost of capital) The target capital structure for QM Industries is 40% common stock, 12% preferred stock, and 48% debt. If the cost of common equity for the firm is 18.5%, the cost of preferred stock is 10.7%, the before-tax cost of debt is 8.5%, and the finn's tax rate is 35%, what is QMs weighted average cost of capital?QM's WACC is 0%. (Round to three decimal places.)5. (Weighted average cost of capital) Crypton Electronics has a capital structure consisting of 37% common stock and 63% debt. A debt issue of$1,000 par value, 6.1% bonds that mature in 15 years and pay annual interest will sell for $972. Common stock of the firm is currently selling for $29.96 per share and the firm expects to pay a $2.24 dividend next year. Dividends have grown at the rate of 5.1% per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the finn's tax rate is 30%?Crypton's cost of capital is 0 %. (Round to three decimal places.)6. (Weighted average cost of capital) The target capital structure for Jowers Manufacturing is 46% common stock, 12% preferred stock, and 42% debt stock. If the cost of common equity for the firm is 19.9%, the cost of preferred stock is 12.5%, and the beforetax cost of debt is 10.7%, what is Jowers' cost of capital? The firm's tax rate is 34%.

 

Paper#50454 | Written in 18-Jul-2015

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