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1# .Shi Importers' balance sheet shows $300 millio...

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1# .Shi Importers' balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi faces a 40% tax rate and the following data: rd=6% rps=5.8% rs=12% If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is Shi's WACC? #2. David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.6 percent. What is the company's cost of equity capital? #3.A company's 6% coupon rate, semiannual payment, $1000 par value bond that matures in 30 years sells at a price of $515.16. The company's federal-plus-state tax rate is 40%. What is the firm's component cost of debt for the purposes of calculating the WACC? (Base your answer on the nominal rate.)

 

Paper#8835 | Written in 18-Jul-2015

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