Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company A has a %21 tax rate . it has issued 20,000 shares of common stock and has equity of 900,000$. In addition the corporation

Company A has a %21 tax rate . it has issued 20,000 shares of common stock and has equity of 900,000$. In addition the corporation has dept at a before tax rate of 5,25% in amounts as shown below on the relevant portion of the balance sheet.Further assumes the copmpanys beta is1.2.10- years us treusiers carry a rate of 0,98, and our analysis estimate a market return of 11.8%

Account payable 20,000

Note Payabale 10,000

Accruals 16,000

Cuurent Portion of long trem debt 27,260

Totatl Current Liabilities 73,260

Long Term Debts 568,334

Total Liabilities 641,594

Calculate the cost of capital using WAAC .Remember to use after tax values .Show your work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Practical Approach

Authors: Jeffrey Slater, Debra Good

13th Canadian edition

134616316, 134166698, 9780134632407 , 978-0134166698

More Books

Students also viewed these Accounting questions

Question

Do not get married, wait until I come, etc.

Answered: 1 week ago

Question

Do not come to the conclusion too quickly

Answered: 1 week ago

Question

Engage everyone in the dialogue

Answered: 1 week ago