Question
Cost of Capital Assignment: Fall 2022 David and Amelias Toy Manufacturing, Equity Information 50 million shares Issued with $40 Par value Sold at $40 per
Cost of Capital Assignment: Fall 2022 David and Amelias Toy Manufacturing,
Equity Information 50 million shares Issued with $40 Par value Sold at $40 per share, no excess Market Price: $80 per share D0 = $5.15 Growth Rate = 5.0% Flotation Cost = 9.0% Retained Earnings = $1 billion Debt Information $1 billion in outstanding debt $1,000 face value per bond Current quote = 110 Coupon rate = 9%, semiannual coupons 15 years to maturity Flotation Cost = 2%
Inc Assignment: Determine The after-tax cost of equity funding? The after-tax cost of long-term debt funding? The book value weights? The marginal or market value weights? The after-tax weighted average cost of capital (WACC) at book value? The after-tax weighted average cost of capital (WACC) at market value? Marginal Tax Bracket: 21%
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