Question
An analyst is trying to determine the capital structure for Big Dawg Incorporated. After some careful...
An analyst is trying to determine the capital structure for Big Dawg Incorporated. After some careful research, the analyst knows the following:
--Big Dawg has 1.94 million shares of common stock trading today at $19.13 per share. The book value of Big Dawg common stock is $15.00 million. The cost of equity for the firm is estimated to be 16.00%.
--Big Dawg has $9.00 million in long-term debt on its balance sheet. The debt is trading at 92.00% of face value in the market with a yield to maturity of 9.00%. The tax rate facing the firm is 36.00%.
What portion is equity in the firm’s capital structure?
Submit
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
An analyst is trying to determine the capital structure for Big Dawg Incorporated. After some careful...
An
analyst is trying to determine the capital structure for Big Dawg
Incorporated. After some careful research, the analyst knows the
following --Big Dawg has 1.60 million shares of common stock
trading today at $19.00 per share. The book value of Big Dawg
common stock is $15.00 million . The cost of equity for the firm is
estimated to be 12.00 %. --Big Dawg has $12.00 million in long-term
debt on its balance sheet . The debt is trading at...
An analyst is trying to determine the capital structure for Big Dawg Incorporated. After some careful...
An analyst is trying to determine the capital structure for Big
Dawg Incorporated. After some careful research, the analyst knows
the following:
--Big Dawg has 1.63 million shares of common stock trading today
at $19.91 per share. The book value of Big Dawg common stock is
$12.00 million. The cost of equity for the firm is estimated to be
15.00%.
--Big Dawg has $7.00 million in long-term debt on its balance
sheet. The debt is trading at 90.00% of face...
An analyst is trying to determine the optimal capital structure for a manufacturing firm. Based on...
An analyst is trying to determine the optimal capital structure
for a manufacturing firm. Based on current credit markets and the
risk of the company, he has the following estimates for different
capital weights:
Structure A
Structure B
Structure C
Structure D
MV of Debt
$0
$5,000
$10,000
$15,000
MV of Equity
$20,000
$15,000
$10,000
$5,000
YTM of debt
0.00%
6.00%
8.38%
10.10%
Beta
1.20
1.29
1.39
1.94
The current risk free rate is 3.00%, while the market portfolio
risk...
Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first...
Marginal Incorporated (MI) has determined that its after-tax
cost of debt is 5.0% for the first $74 million in bonds it issues,
and 9.0% for any bonds issued above $74 million. Its cost of
preferred stock is 15.0%. Its cost of internal equity is 18.0%, and
its cost of external equity is 22.0%. Currently, the firm's capital
structure has $400 million of debt, $60 million of preferred stock,
and $540 million of common equity. The firm's marginal tax rate is...
50) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the...
50) Marginal Incorporated (MI) has determined that its after-tax
cost of debt is 5.0% for the first $74 million in bonds it issues,
and 9.0% for any bonds issued above $74 million. Its cost of
preferred stock is 15.0%. Its cost of internal equity is 18.0%, and
its cost of external equity is 22.0%. Currently, the firm's capital
structure has $400 million of debt, $60 million of preferred stock,
and $540 million of common equity. The firm's marginal tax rate...
The McGee Corporation finds it is necessary to determine its marginal cost of capital. McGee’s current...
The McGee Corporation finds it is necessary to determine its
marginal cost of capital. McGee’s current capital structure calls
for 35 percent debt, 25 percent preferred stock, and 40 percent
common equity. Initially, common equity will be in the form of
retained earnings (Ke) and then new common stock (Kn). The costs of
the various sources of financing are as follows: debt, 6.2 percent;
preferred stock, 8.0 percent; retained earnings, 11.0 percent; and
new common stock, 12.2 percent.
a. What...
The McGee Corporation finds it is necessary to determine its marginal cost of capital. McGee’s current...
The McGee Corporation finds it is necessary to determine its
marginal cost of capital. McGee’s current capital structure calls
for 40 percent debt, 10 percent preferred stock, and 50 percent
common equity. Initially, common equity will be in the form of
retained earnings (Ke) and then new common
stock (Kn). The costs of the various sources of
financing are as follows: debt, 7.2 percent; preferred stock, 5.0
percent; retained earnings, 12.0 percent; and new common stock,
13.2 percent.
a. What...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of
Capital
The firm's target capital structure is the mix of debt,
preferred stock, and common equity the firm plans to raise funds
for its future projects. The target proportions of debt, preferred
stock, and common equity, along with the cost of these components,
are used to calculate the firm's weighted average cost of capital
(WACC). If the firm will not have to issue new common stock, then
the cost of retained earnings...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital
The firm's target capital structure is the mix of debt,
preferred stock, and common equity the firm plans to raise funds
for its future projects. The target proportions of debt, preferred
stock, and common equity, along with the cost of these components,
are used to calculate the firm's weighted average cost of capital
(WACC). If the firm will not have to issue new common stock, then
the cost of retained earnings...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital
The firm's target capital structure is the mix of debt,
preferred stock, and common equity the firm plans to raise funds
for its future projects. The target proportions of debt, preferred
stock, and common equity, along with the cost of these components,
are used to calculate the firm's weighted average cost of capital
(WACC). If the firm will not have to issue new common stock, then
the cost of retained earnings...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 7 minutes ago
asked 10 minutes ago
asked 23 minutes ago
asked 25 minutes ago
asked 30 minutes ago
asked 34 minutes ago
asked 40 minutes ago
asked 46 minutes ago
asked 55 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago