A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm forecasted that it will not have enough retained earnings to fund the equity portion of its capital structure. As of today this company has an outstanding shares of 10,000. The following are data collected by the firm whose net income is P40,000 and stock price is P25: • Cost of debt = 8%. • Payout ratio = 50%. • Tax rate = 40%. • Flotation cost on additional equity = 15%. • Growth rate = 0%. The after tax cost of debt is? a. 4.8% b. 5.1% c. 5.5% d. 5.9%
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A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm
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- A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm forecasted that it will not have enough retained earnings to fund the equity portion of its capital structure. As of today this company has an outstanding shares of 10,000. The following are data collected by the firm whose net income is P40,000 and stock price is P25: • Cost of debt = 8%. • Payout ratio = 50%. • Tax rate = 40%. • Flotation cost on additional equity = 15%. • Growth rate = 0%. What is the amount of the weighted after tax cost of debt? a. 1.45% b. 1.92% c. 2.04% d. 2.36%A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm forecasted that it will not have enough retained earnings to fund the equity portion of its capital structure. As of today this company has an outstanding shares of 10,000. The following are data collected by the firm whose net income is P40,000 and stock price is P25: • Cost of debt = 8%. • Payout ratio = 50%. • Tax rate = 40%. • Flotation cost on additional equity = 15%. • Growth rate = 0%. How much is the dividends paid per outstanding shares?A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm forecasted that it will not have enough retained earnings to fund the equity portion of its capital structure. As of today this company has an outstanding shares of 10,000. The following are data collected by the firm whose net income is P40,000 and stock price is P25: • Cost of debt = 8%. • Payout ratio = 50%. • Tax rate = 40%. • Flotation cost on additional equity = 15%. • Growth rate = 0% How much is the dividends paid per outstanding shares? The total amount of dividends the company paid is? The cost of the new common stock is?
- A company has determined that its optimal capital structure: of 40% debt and 60% equity. The firm forecasted that it will not have enough retained earnings to fund the equity portion of its capital structure. As of today this company has an outstanding shares of 10,000. The following are data collected by the firm whose net income is P40,000 and stock price is P25: • Cost of debt = 8%. • Payout ratio = 50%. • Tax rate = 40%. • Flotation cost on additional equity = 15%. • Growth rate = 0% The after tax cost of debt is? What is the amount of the weighted after tax cost of debt? Calculate the firm’s weighted average cost of capital. Thank youShoobee, Inc. has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average of capital. The WACC it to be measured by using the following weights: 50% long term, 10% preferred stock, and 40% common stock equity (retained earnings, new common stock issuance, or both). The firm tax is 25%. Debt: The firm can sell for P980, a 10-year, P1,000 par value bond paying annual interest at 13% coupon rate. A flotation cost of 3% of the par value is required in addition to the discount of P20 per bond. Preferred stock: 8 percent (annual dividend) preferred stock having a par value of P100 can be sold for P65. An additional fee of P2.00 per share must be paid to the underwriters. Common stock: The firm’s common stock is currently selling for P50 per share. The recent dividend paid was P4.00 per share. Its dividend payments which have approximately 60% of earnings per share in each past 6 years follows: Year Dividend 2021 P4.00 2020 3.75…Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 30% long-term debt, 10% preferred stock, and 60% common stock equity (retained earnings, new common�� stock, or both). The firm's tax rate is 23%. Debt : The firm can sell for $1030 a 14-year, $1,000-par-value bond paying annual interest at a 8.00% coupon rate. A flotation cost of 2% of the par value is required. Preferred stock: 9.00% (annual dividend) preferred stock having a par value of $100 can be sold for $92.An additional fee of $2 per share must be paid to the underwriters. Common stock: The firm's common stock is currently selling for $90 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.00 ten years ago to the $3.26 dividend payment, D0, that the company just recently made.…
- You have the following data for your company. Market Value of Equity: $520 Book Value of Debt: $130 Required rate of return on equity: 12% Required rate of return on debt (pre-tax): 7% Corporate tax rate: 25% The company's debt is assumed to be is reasonably safe, so the book value of debt is a reasonably approximation for the market value of debt. What is the weighted average cost of capital for this company?Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 30% long-term debt, 10% preferred stock, and 60% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 23%. Debt : The firm can sell for $1030 a 14-year, $1,000-par-value bond paying annual interest at a 8.00% coupon rate. A flotation cost of 2% of the par value is required. Preferred stock: 9.00% (annual dividend) preferred stock having a par value of $100 can be sold for $92.An additional fee of $2 per share must be paid to the underwriters. Common stock: The firm's common stock is currently selling for $90 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.00 ten years ago to the $3.26 dividend payment, D0, that the company just recently made.…Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 35% long-term debt, 20% preferred stock, and 45% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 21%. Debt The firm can sell for $1030 a 13-year, $1,000-par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2% of the par value is required. Preferred stock 8.5% (annual dividend) preferred stock having a par value of $100 can be sold for $90. An additional fee of $4 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $60 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.75 ten years ago to the $5.41 dividend payment, D0, that the company just recently made. If the…
- Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 35% long-term debt, 20% preferred stock, and 45% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 21%. Debt The firm can sell for $1030 a 13-year, $1,000-par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2% of the par value is required. Preferred stock 8.5% (annual dividend) preferred stock having a par value of $100 can be sold for $90. An additional fee of $4 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $60 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.75 ten years ago to the $5.41 dividend payment, D0, that the company just recently made. If the…Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 40% long-term debt, 15% preferred stock, and 45% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 26%. Debt The firm can sell for $1005 a 13-year, $1,000-par-value bond paying annual interest at a 6.00% coupon rate. A flotation cost of 2.5% of the par value is required. Preferred stock 7.00% (annual dividend) preferred stock having a par value of $100 can be sold for $98. An additional fee of $5 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $80 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.50 ten years ago to the $4.92 dividend payment, D0, that the company just recently made. If…Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 40% long-term debt, 15% preferred stock, and 45% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 26%. Debt The firm can sell for $1005 a 13-year, $1,000-par-value bond paying annual interest at a 6.00% coupon rate. A flotation cost of 2.5% of the par value is required. Preferred stock 7.00% (annual dividend) preferred stock having a par value of $100 can be sold for $98. An additional fee of $5 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $80 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.50 ten years ago to the $4.92 dividend payment, D0, that the company just recently made. If…