Oberon, Inc., has a $40 million (face value) 10-year bond issue selling for 97 percent of par that pays an annual coupon of 8.15 percent.
What would be Oberon’s before-tax component cost of debt? (Round your answer to 2 decimal places.)
Cost of debt
Marme, Inc., has preferred stock selling for 97 percent of par that pays a 12 percent annual coupon.
What would be Marme’s component cost of preferred stock? (Round your answer to 2 decimal places.)
Cost of preferred stock
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $29 per share, the preferred shares sell for $15.50 per share, and the bonds sell for 98 percent of par.
What weight should you use for preferred stock in the computation of FarCry’s WACC? (Round your answer to 2 decimal places.)
Suppose that TapDance, Inc.’s, capital structure features 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. Assume the appropriate weighted average tax rate is 34 percent.
What will be TapDance’s WACC? (Round your answer to 2 decimal places.)
TAFKAP Industries has 2 million shares of stock outstanding selling at $16 per share, and an issue of $12 million in 8.0 percent annual coupon bonds with a maturity of 15 years, selling at 105 percent of par. Assume TAFKAP’s weighted average tax rate is 34 percent and its cost of equity is 14.0 percent.
What is TAFKAP’s WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Suppose that Brown-Murphies’ common shares sell for $17.50 per share, that the firm is expected to set their next annual dividend at $0.49 per share, and that all future dividends are expected to grow by 6 percent per year, indefinitely. Assume Brown-Murphies faces a flotation cost of 11 percent on new equity issues.
What will be the flotation-adjusted cost of equity? (Round your answer to 2 decimal places.)
Cost of equity
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