Bento, Inc., has a target debt-equity ratio of .80. Its cost of equity is 12 percent, and

Question:

Bento, Inc., has a target debt-equity ratio of .80. Its cost of equity is 12 percent, and its cost of debt is 7 percent. If the tax rate is 21 percent, what is the company’s WACC?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

See More Books

Question Posted: Nov 13, 2020 05:03 AM

See More Questions

Nally, Inc., is considering a project that will result in initial after tax cash savings of $4.2 million at the end of the first year, and these savings will grow at a rate of 2.5 percent per year...
Retlaw Corporation (RC) manufactures time series photographic equipment. It is currently at its target debt equity ratio of .80. Its considering building a new $50 million manufacturing facility....
The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 percent and its before-tax borrowing rate is 8 percent. Given a marginal tax rate of 35 percent,...
A 1.0-kg trash-cal lid is suspended against gravity by tennis balls thrown vertically upward at it. How many tennis balls per second must rebound from the lid elastically, assuming they have a mass...
Why would a statistician consider an inference incomplete without an accompanying measure of its reliability?
I:10-18 In a business combination, why does the buyer generally prefer to allocate as much of the purchase price to short-lived depreciable assets, ordinary assets such as inventory, and Sec. 197...
Explain the various components of brand equity.
1. To compute the price elasticity of demand, we divide the percentage change in_______ by the percentage change in _______and then take the _______value of the ratio. 2. If a 10 percent increase in...
Do you think contingent valuation should be widely used as a tool for developing environmental policy recommendations? What do you think is the main strength of CV? What do you think is its main...
A multiprocessor with eight processors has 20 attached tape drives. There is a large number of jobs submitted to the system that each require a maximum of four tape drives to complete execution....
Famas Llamas has a weighted average cost of capital of 8.6 percent. The companys cost of equity is 11.2 percent and its pretax cost of debt is 6.4 percent. The tax rate is 21 percent. What is the...
Croft Corporation has a target capital structure of 75 percent common stock and 25 percent debt. Its cost of equity is 11.2 percent, and the cost of debt is 5.8 percent. The tax rate is 21 percent....
(Appendix) Cost Allocation and Analysis of Applied Overhead: White Paper Packaging Corporation prepares cardboard cartons according to cus- tomer orders. The company uses a job cost system because...
When in 1920 the Chia brothers opened their first shop in Bangkok selling seeds for farmers, they did not know that they were on the way to launching the development of one of the most successful...
In Exercises 49-52, sketch a plane. Then sketch the described situation. Three noncollinear points that lie in the plane
In Exercises 49-52, sketch a plane. Then sketch the described situation. A plane perpendicular to the given plane
Trace the polygon and point P on paper. Then draw a rotation of the polygon the given number of degrees about P. 150 F P G
Trace the polygon and point P on paper. Then draw a rotation of the polygon the given number of degrees about P. 30 B C
In problem use (1) to find the general solution of the given differential equation on (0, ). d [xy'] + (x dx 4 =D0
The manager for retail customers, Katie White, wants to hear your opinion regarding one business offer she has received from an entrepreneur who is starting a mobile phone app called Easy Money. The...
The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: ..............................................Flannery...
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. .........................................Firm B...
No matter how you look at it, Dow Chemical had busy years in 2014 and 2015. In 2014, Dow announced that it was planning to sell its subsidiaries Angus Chemical Company, Sodium Borohydride, and...
En prenant un exemple de votre choix, montrer comment on value un swap de taux de change.
How much would you need to invest today in order to receive: a. $10,000 in 5 years at 11%? b. $11,000 in 12 years at 8%? c. $12,000 each year for 10 years at 8%? d. $12,000 at the beginning of each...
A company that manufactures pulse Doppler insertion flow meters uses the Straight Line method for book depreciation purposes. Newly acquired equipment has a first cost of $190,000 with a 3-year life...

Bento, Inc., has a target debt-equity ratio of .80. Its cost of equity is 12 percent, and

Question:

Step by Step Answer:

Here we need to use the ...View the full answer

Corporate Finance Core Principles And Applications

Students also viewed these Business questions