Question

Given the following information:

Percent of capital structure:

Debt | 25 | % |

Preferred stock | 15 | |

Common equity | 60 | |

Additional information:

Bond coupon rate | 9% | ||

Bond yield to maturity | 7% | ||

Dividend, expected common | $ | 3.00 | |

Dividend, preferred | $ | 10.00 | |

Price, common | $ | 50.00 | |

Price, preferred | $ | 116.00 | |

Flotation cost, preferred | $ | 8.50 | |

Growth rate | 6% | ||

Corporate tax rate | 30% | ||

Calculate the Hamilton Corp.'s weighted cost of each source of
capital and the weighted average cost of capital. **(Do not
round intermediate calculations. Input your answers as a percent
rounded to 2 decimal places.)
**

Answer #1

**Debt:**

cost of debt=7% --- yield to maturity

after tax cost of debt =cost of debt*(1-tax rate)=7*(1-.3)=4.9%

after tax weighted cost of debt= percentage of capital*after tax cost of debt

=.25*4.9=1.225%

**Common Equity:**

cost of equity = D1/P(1-F) + g

where D1=dividend expected ; P=Price of share ; F=Floatation cost ; g=growth rate

cost of equity= 3/50 + .06 =12%

weighted cost of equity =.6*12=7.2%

**Preferred equity:**

cost of preferred equity = D1/P(1-F)

where D1=dividend ; P=Price of share ; F=Floatation cost ;

cost of preferred equity= 10/(116*(1-.085)) =9.42%

weighted cost of preferred share= .15*9.42% =1.413%

**WACC= sum of (weighted cost of capitals)**

**=1.225+7.2+1.413= 9.838%**

Given the following information:
Percent of capital structure:
Debt
10
%
Preferred stock
5
Common equity
85
Additional information:
Bond coupon rate
13%
Bond yield to maturity
11%
Dividend, expected common
$
7.00
Dividend, preferred
$
14.00
Price, common
$
70.00
Price, preferred
$
110.00
Flotation cost, preferred
$
2.50
Growth rate
4%
Corporate tax rate
30%
Calculate the Hamilton Corp.'s weighted cost of each source of
capital and the weighted average cost of capital. (Do not
round...

Given the following information:
Percent of capital structure:
Debt
30
%
Preferred stock
10
Common equity
60
Additional information:
Bond coupon rate
18%
Bond yield to maturity
14%
Dividend, expected common
$
8.00
Dividend, preferred
$
15.00
Price, common
$
75.00
Price, preferred
$
112.00
Flotation cost, preferred
$
6.50
Growth rate
3%
Corporate tax rate
35%
Calculate the Hamilton Corp.'s weighted cost of each source of
capital and the weighted average cost of capital. (Do not
round intermediate calculations....

Percent of capital structure:
Debt
35
%
Preferred stock
20
Common equity
45
Additional information:
Bond coupon rate
11%
Bond yield to maturity
9%
Dividend, expected common
$
5.00
Dividend, preferred
$
12.00
Price, common
$
60.00
Price, preferred
$
120.00
Flotation cost, preferred
$
3.80
Growth rate
8%
Corporate tax rate
40%
Calculate the Hamilton Corp.'s weighted cost of each source of
capital and the weighted average cost of capital.
Weighted Cost
Debt=
Preferred stock=
Common equity=...

Given the following information: Percent of capital
structure:
Preferred
stock
20
%
Common
equity
40
Debt
40
Additional information:
Corporate tax
rate
34
%
Dividend,
preferred
$
8.50
Dividend,
expected common
$
2.50
Price,
preferred
$
105.00
Growth rate
7
%
Bond yield
9.5
%
Flotation cost,
preferred
$
3.60
Price,
common
$
75.00
Calculate the weighted average cost of capital for Digital
Processing Inc. (Do not round intermediate calculations.
Input your answers as a percent rounded to 2 decimal...

Given the following information:
Percent of capital structure:
Preferred stock 20 %
Common equity 40
Debt 40
Additional information:
Corporate tax rate 34 %
Dividend, preferred $ 8.50
Dividend, expected common $ 2.50
Price, preferred $ 105.00
Growth rate 7 %
Bond yield 9.5 %
Flotation cost, preferred $ 3.60
Price, common $ 75.00
Calculate the weighted average cost of capital for Digital
Processing Inc. (Do not round intermediate calculations. Input your
answers as a percent rounded to 2 decimal...

Given the following information. Percent of capital structure:
Debt 35 % Preferred stock 20 Common equity 45 Additional
information: Bond coupon rate 10 % Bond yield 8 % Dividend,
expected common $6.00 Dividend, preferred $13.00 Price, common
$65.00 Price, preferred $138.00 Flotation cost, preferred $5.20
Corporate growth rate 5 % Corporate tax rate 40 % Calculate the
weighted average cost of capital for Genex Corporation. Line up the
calculations in the order shown in Table 11-1. (Do not round your...

Problem 11-23 Weighted average cost of capital [LO11-1]
Given the following information:
Percent of capital structure:
Preferred stock
20
%
Common equity
60
Debt
20
Additional information:
Corporate tax rate
40
%
Dividend, preferred
$
11.00
Dividend, expected common
$
6.50
Price, preferred
$
107.00
Growth rate
9
%
Bond yield
8
%
Flotation cost, preferred
$
7.50
Price, common
$
91.00
Calculate the weighted average cost of capital for Digital
Processing Inc. (Do not round intermediate calculations.
Input your...

The capital structure of Jolly Jellybeans Corp. is as
follows:
Debt: 40%
Preferred stock: 10%
Common stock: 50%
Additional information about the company is also given:
Price of common stock
$35
Dividend (common stock)
$1.25
Growth rate (common stock)
5%
Price (preferred)
$80
Dividend (preferred)
$6.25
Flotation cost (preferred)
$2.00
Bond YTM
8%
Corporate tax rate
25%
Compute Jolly’s WACC.
(Hint: Start with computing the costs of each component in the
capital structure.) State your answer as xx.xx%
(for example...

(TCO 4) Given the following information, calculate the weighted
average cost for the Han Corp. Percent of capital structure:
Preferred stock 10% Common equity 60% Debt 30% Additional
information: Corporate tax rate 34% Dividend, preferred $9.00
Dividend, expected common $3.50 Price, preferred $102.00 Growth
rate 6% Bond yield 10% Flotation cost, preferred $3.20 Price,
common $70.00

Given the following information, calculate the weighted average
cost of capital for Puppet Corporation. (Round intermediate
calculations to 2 decimal places. Round the final answers to 2
decimal places.) Percent of capital structure: Debt 30% Preferred
stock 60 Common equity 10 Additional information: Bond coupon rate
8.5% Bond yield 6.75% Bond flotation cost 2% Dividend, expected
common $1.50 Price, common $30.00 Dividend, preferred 5% Flotation
cost, preferred 3% Flotation cost, common 4.00% Corporate growth
rate 6% Corporate tax rate 35%...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 45 seconds ago

asked 46 seconds ago

asked 46 seconds ago

asked 2 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 8 minutes ago

asked 9 minutes ago