3. A company has determined that its optimal; capital structure consists of 40%debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital budget. Also assume the firm accounts for flotation cost by adding the cost of capital. Given the following information, calculate the firm's WACC. Pay out ratio- 60% Net Income - P40,000; Estimated bond yield - 8%; Market Price - P25.00; Flotation cost-12% Shares outstanding - 10,000 shares Growth 5% Tax rate 40% - .

3. A company has determined that its optimal; capital structure consists of 40%debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital budget. Also assume the firm accounts for flotation cost by adding the cost of capital. Given the following information, calculate the firm's WACC. Pay out ratio- 60% Net Income - P40,000; Estimated bond yield - 8%; Market Price - P25.00; Flotation cost-12% Shares outstanding - 10,000 shares Growth 5% Tax rate 40% - .

Name: please answer with complete computation 3. A company has determined th
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Description: please answer with complete computation 3. A company has determined that its optimal; capital structure consists of 40%debt and 60%equity. Assume the firm will not have enough retained earnings to fund the equity portion ofits capital budget. Also as

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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6. A company has determined that its optimal; capital structure consists of 40%debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital budget. Also assume the firm accounts for flotation cost by adding the cost of capital. Given the following information, calculate the firm's WACC. ● ● Net Income - P40,000; Estimated bond yield - 8%; Market Price P25.00; Flotation cost - 12% Pay out ratio - 60% Shares outstanding - 10,000 shares Growth - 0% Tax rate - 40%
A company has determined that its optimal; capital structure consists of 40%debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital budget. Also assume the firm accounts for flotation cost by adding the cost of capital. Given the following information, calculate the firm's WACC. Net Income - P40,000; Pay out ratio 60% Estimated bond yield - 8%; Shares outstanding - 10,000 shares Market Price = P25.00 ; Growth = 5% Flotation cost - 12% ; Tax rate - 40% show solution
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