Question
Adjusted WACC . Clark Explorers, Inc., an engineering firm, has the following capital structure: Equity Preferred Stock Debt Market Price $86.25 $223.95 $1020.47 Outstanding units
Adjusted
WACC.
Clark Explorers, Inc., an engineering firm, has the following capital structure:
| Equity | Preferred Stock | Debt |
|
Market Price | $86.25 | $223.95 | $1020.47 | |
Outstanding units | 140,000 | 6,000 | 6,012 | |
Book value | $3,468,000 | $1,238,000 | $6,012,000 | |
Cost of capital | 15.35% | 11.16% | 8.1% |
Using market value and book value (separately, of course), find the adjusted WACC for Clark Explorers at the following tax rates:
a.35%
b.25%
c.15%
d.5%
a.What is the market value adjusted WACC for Clark Explorers at a tax rate of 35%?
What is the book value adjusted WACC for Clark Explorers at a tax rate of 35%?
b.What is the market value adjusted WACC for Clark Explorers at a tax rate of 25%?
What is the book value adjusted WACC for Clark Explorers at a tax rate of 25%?
c.What is the market value adjusted WACC for Clark Explorers at a tax rate of 15%?
What is the book value adjusted WACC for Clark Explorers at a tax rate of 15%?
d.What is the market value adjusted WACC for Clark Explorers at a tax rate of 5%?
What is the book value adjusted WACC for Clark Explorers at a tax rate of 5%?
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