Question
1 Suppose Corporation A has a book (face) debt value of $5 Million USD, trading at 70% of its face value. It also has book
1 "Suppose Corporation A has a book (face) debt value of $5 Million USD, trading at 70% of its face value. It also has book equity of $15 Million USD, and 4 Million shares of common stock trading at $12 per share. What weights should Corporation A use for Debt capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
2 "Suppose Corporation A has a book (face) debt value of $5 Million USD, trading at 70% of its face value. It also has book equity of $15 Million USD, and 4 Million shares of common stock trading at $12 per share. What weights should Corporation A use for Equity capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
3 "Last year Firm D had a weighted interest rate of debt of 2.3%. If the corporate tax was 27.5% for that firm. What was the after tax interest rate on debt for firm D? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
4 "Firm XYZ issues a constant amount of preferred dividends at an annual value of $12. Its current preferred stock price is $95. What is the cost of preferred equity for Firm XYZ? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
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