Question
Your company tax rate is 35%.Your loan documents on your long term debt indicate an interest rate of 8.00%.What is the RATE (R) value you
Your company tax rate is 35%.Your loan documents on your long term debt indicate an interest rate of 8.00%.What is the RATE (R) value you would use for this Capital Component when calculating a WACC?
Given the following information, what is the current WACC for this firm?
Component Balance Sheet Value
Short Term Debt $2,000,000
Long Term Debt $7,000,000
Preferred Stock $1,000,000
Total Common Equity $4,000,000
Interest Rate Per Short Term Loan Documents 7.00%
Interest Rate per Long Term Loan Documents 9.00%
Dividend Rate on Preferred Stock 11.00%
Common Dividends Paid in Last 12 Months 15.00%
Company Tax Rate 35%
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Financial Management Principles and Applications
Authors: Sheridan Titman, Arthur J. Keown, John H. Martin
13th edition
134417216, 978-0134417509, 013441750X, 978-0134417219
