11. A firm’s estimated costs of debt, preferred stock, and common stock are
13%, 17%, and 22%, respectively. Assuming equal funding from each
source and a 30% tax rate, the weighted average cost of capital is closest
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12. An analyst gathers the following information about the capital structure and before-tax component costs for a company. The company’s marginal tax rate is 35 percent.
13. A.F. Company has a debt to equity ratio of 60% and is subject to taxation at
a rate of 40%. Its cost of equity is 17% while its cost of debt is 12.5%. A.F.
Company’s weighted average cost of capital is closest to:
14. Golden Giants has the following capital structure which is funded from common stock, preferred stock and debt.
15. Pamela Peterson computes the weighted average cost of capital (WACC) for the company Atom International. The information used for computation is as follows:-Common equity has beta 1.2 while the risk free rate and market premium are 5% and 7% respectively. The preferred stock has value of $48 with a dividend worth $6.-The corporate tax rate is 20%.-Bonds are issued at par and have a coupon rate of 11%.-Capital structure is 20% preferred stock, 35% debt and 45% common stock. Atom International’s WACC is closest to:
UGC NET PAPER 1
UGC NET Management
UGC NET COMPUTER SCIENCE
UGC NET COMMERCE
GATE COMPUTER SCIENCE
CFA Level 1
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