What would Lyft Inc (LYFT)'s weightedaverage cost of capital with this capital structure:
What formula do you use to calculate the cost of equity?
A. 
Gordon growth model 

B. 
Capital asset pricing model 

C. 
Weighted average cost of capital 
What is the cost of equity?
A. 
5.33% 

B. 
7.00% 

C. 
3.16% 
What formula do you use to calculate the cost of preferred stock?
A. 
Capital asset pricing model 

B. 
Gordon growth model 

C. 
Preferred dividend yield 
What is the cost of preferred stock?
A. 
3.16% 

B. 
7.00% 

C. 
5.33% 
n this example, what should you use for the aftertax cost of debt when calculating your weighted average cost of capital?
A. 
Bond coupon rate and tax rate 

B. 
Just the coupon rate as debt is no longer tax advantaged 

C. 
Bond yield and tax rate 
What is the aftertax cost of debt?
A. 
7.00% 

B. 
3.16% 

C. 
5.33% 
What is the market value of the common stock?
A. 
$4.5 billion 

B. 
$10.8 billion 

C. 
$5.68 billion 
What percent of your capital structure is in common stock?
A. 
51.47% 

B. 
21.45% 

C. 
27.09% 
What is the market value of preferred stock?
A. 
$5.68 billion 

B. 
$10.8 billion 

C. 
$4.5 billion 
A. CAPM will be used as data is available for that only
Cost of Equity = Risk free rate + beta*market risk premium
= 2.5% + 0.9*5%
= 7.00%
i.e. B
C.Preferred Dividend yield will be used
19.Cost = Annual dividend/Current price
= 4/75
= 5.33%
i.e. C
C.Yield and tax rate
After tax cost = Yield*(1Tax rate)
= 4%*(121%)
= 3.16%
i.e. B
Market value of common stock = 150 million*72
= 10,800 million
i.e. B.10.8 billion
Percent = 10,800 million/(10,800 million +60 million*75 + 5 million*1000*113.68%)
= 51.47%
i.e A
Market value of preferred stock = 60 million*75
= C. $4.5 billion
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