of Capital s 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital Bob's is a retail chain of specialty hardware stores. The firm has 23,000 shares of stock outstanding that are currently valued at $37 a share and provide a 14.6 percent rate of return. The firm also has 1.200 bonds outstanding that have a face value of $1,000. a market price of $1,040, and a 5.5 percent coupon. These bonds mature in 8 years and pay interest semiannually. The tax rate is 24 percent. What is the firm's WACC? WACC = Allowed attempts: 3 Check Answer of Capital = 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital Swizer Industries has two separate divisions Division X has less risk so its projects are assigned a discount rate equal to the firm's WACC minus 0.5 percent. Division Y has more risk and its projects are assigned a rate equal to the firm's WACC plus 1 percent. The company has a debt-equity ratio of 0.35 and a tax rate of 35 percent. The cost of equity is 15,7 percent and the aftertax cost of debt is 8.1 percent. What discount rate should be assigned for Division X and for Division Y? Division X% Division Y% Kalaminte of Capital nts 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital Alpha Industries uses the subjective approach to assign discount rates to projects. For a particular project, the subjective adjustment is +8.5 percent. The firm has a pretax cost of debt of 6.4 percent and a cost of equity of 12.3 percent. The debt- equity ratio is 0.6 and the tax rate is 12 percent. What discount rate should Alpha Industries use for this project? Discount rate= % Allowed attempts: 3 Check Answer Homework 13: Cost of Capital Cost of Capital Points 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital The 15 percent preferred stock of Home Town Brewers is selling for $105 a share. What is the firm's cost of preferred stock if the tax rate is 35 percent and the par value per share is $100? Cost of preferred Incorrect Attempt #1:0/1 (Score: 0/1) Allowed attempts: 3 Check Answer ost of Capital Points 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital Kim's Bridal Shoppe has 15,000 shares of common stock outstanding at a price of $22 a share. It also has 5,000 shares of preferred stock outstanding at a price of $23 a share. There are 105 bonds outstanding that have a 2 percent semiannual coupon. The bonds mature in 17 years, have a face value of $1,000, and sell at 101 percent of par What is the capital structure weight of the common stock? Weight of common stock = Allowed attempts: 3 Check Answer mework 13: Cost of Capital t of Capital ints 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital Western Electric has 41,000 shares of common stock outstanding at a price per share of $39 and a rate of return of 12.4 percent. The firm has 17,000 shares of 7 percent preferred stock outstanding at a price of $84 a share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $530,000 and currently sells for 104 percent of face. The yield to maturity on the debt is 7.95 percent . What is the fim's weighted average cost of capital if the tax rate is 22 percent? WACC = Allowed attempts: 3 Check Answer t of Capital ints 20 Submitting an external tool Available until Dec 17 at 10:59pm Homework 13: Cost of Capital The Five and Dime Store has a cost of equity of 17.1 percent, a pretax cost of debt of 6.4 percent, and a tax rate of 22 percent What is the firm's weighted average cost of capital if the debt-equity ratio is 0.35? WACC = Abowed attempts: 3 Check
