wacc

121 results

Business

Why is WACC important to an organization? Thank you for using the Jiskha Homework Help Forum. It is difficult to calculate the WACC but it is a solid way to measure the quality of y our investment. What impact does WACC have on capital budgeting and structure?

finance

why is WACC important to an organization? b. What impact does WACC have on capital budgeting and structure?

Business Finance

Jungle, Inc., has a target debt−equity ratio of 0.72. Its WACC is 11 percent, and the tax rate is 31 percent. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16)) Required: (a) If Jungle's cost of equity is 14 percent, its pretax ...

Corporate Finance

1. The Federal Reserve recently shifted its monetary policy, causing Lasik Vision's WACC to change. Lasik had recently analyzed the project whose cash flows are shown below. However, the CFO wants to reconsider this and all other proposed projects in view of the Fed action. ...

Finance

1.What would the major difference between ROI and WACC be? 2.What happens when folks use WACC for new items for budgeting purposes and then the price increases or the interest rate changes? 3.What you have to recalculate everything or just explain the differences?

investing

1. What does calculating the weighted average cost of capital (WACC) tell you about a company's financial strategy including the level of risk involved in the business? 2. How could the company use WACC calculations in determining future investment?

Finance

The following are the investment and operating costs for two machines, J and K. Year: 0, 1, 2, 3 J: 11000, 1200, 1300 K: 13000, 1200, 1300, 1400 The WACC is 10.5%. How do I use the WACC to determine which machine is a better buy?

FINANCE/MATH

Please use both M&M proposition II with taxes equation and WACC equation to derive the following equation:? WACC = Ru X [1- Tc(D/V)]? I need this by tomorrow please help.

Corporate Finance

Taxes and WACC. Rainbow in the Dark Manufacturing has a target debt-equity ratio of .65. Its cost of equity is 13%, and its cost of debt is 8%. If the tax rate is 35%, what is the company's WACC?

Finance ( NEED HELP BAD)

Masulis Inc is considering a project that has the following cash flow and WACC Data .what is the project discounted payback WACC 10% years 0 1 2 3 4 CASH FLOW -700 525 485 445 405

Finance ( Please help)

Warnock Inc is considering a project that has the following cash flow and WACC Data What is the projects NPV ?note THAT a projects NPV Can be negative in which case it will be rejected . WACC 10.00% year 0 1 2 3 Cash Flows -825 500 400 300 I get C but i am having doubts about ...

Investing ( pease help)

Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. WACC 10.00% Year 0 1 2 3 4 5 Cash flows -$9,000...

Finance

a firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The firm's cost of equity is 14.5 percent and its pre-tax cost of debt is 8.5 percent. The tax rate is 34 percent. What does the debt weight need to be for the firm to achieve its target WACC?

Finance

I need to calculate the WACC with the following information: Cost of debt = 7% Cost of preferred stock is 7.5% Cost of common stock via the CAPM = 6.8% Cost of common stock via the DDM = 7.8% Cost of common stock via the Earnings Multiplier Approach = 8.4% I was told that it's...

Financial Management

What does calculating the weighed average cost of capitol tell you about Foust Company's financial strategy including the level of risk involved in the business? How could the company use WACC calculations in determining future investments? You did not provide any specific ...

Corporate Finance

1. Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average projects at 10%, and high-risk projects at 12%. The company is...

Finance

Houston Inc. is considering a project which involves building a new refrigerated warehouse which will cost $7,000,000 at year = 0 and which is expected to have before tax operating cash flows of $500,000 at the end of each of the next 20 years. The Net Working Capital required...

Finance

Calculate WACC for Target Corporation and Ecolab, Inc

finance

5.Capital Co. has a capital structure, based on current market values, that consists of 21 percent debt, 9 percent preferred stock, and 70 percent common stock. If the returns required by investors are 10 percent, 12 percent, and 17 percent for the debt, preferred stock, and ...

Corporate Finance

5.Capital Co. has a capital structure, based on current market values, that consists of 21 percent debt, 9 percent preferred stock, and 70 percent common stock. If the returns required by investors are 10 percent, 12 percent, and 17 percent for the debt, preferred stock, and ...

Financial Management

I need to find out the WACC for Radio Shack Corporation

Financial management

evaluates investment opportunities using payback. The finance director who has been with the company since its formation in 1975, has recently heard that this method may not be the best for evaluating long term projects. You have been brought in to advise the company and have ...

Finance

When calculating the WACC, it is standard practice to subtract __________ to compute the net debt outstanding.

Financial Management

Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...

Finance 370

What are some other applications where WACC (weighted average cost of capital) would be useful?

Math (Accounting)

Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...

Accounting PLEASE HELP!!!!!!!!!

Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...

Finance

If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4 should be

Finanace

If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4 should be

BUS 401

if a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4 should be

math

Smith and Jones has two separate divisions. Division X produces custom work on a pre-paid basis only for long-term customers and therefore, is subject to less risk than division Y. The company has assigned a discount rate equal to the firm's WACC minus 2 percent to division X ...

Finance

Assume that you are the assistant to the CFO of XYZ Company. Your task is to estimate XYZ's WACC using the following data: 1.The firm's tax rate is 40%. 2.The current price of the 12% coupon, semiannual payment, non-callable bonds with 15 years to maturity is $1,153.72. New ...

Finance

Assume that you are the assistant to the CFO of XYZ Company. Your task is to estimate XYZ's WACC using the following data: The firm's tax rate is 40%. The current price of the 12% coupon, semiannual payment, non-callable bonds with 15 years to maturity is $1,153.72. New bonds ...

Finance

A company is planning to open 100 new outlets that are expected to generate, in total, $15 million in free cash flows per year, with a growth rate of 3% in perpetuity. If the company’s WACC is 10%, what is the NPV of this expansion?

Business/Accounting

How would you explain how to compute the WACC to a new employee at your firm? What are the common pitfalls that you would tell the new employee to avoid?

accounting

If I needed to find out OR calculate the weighted average cost of capital (WACC) for the company General Electric (GE), how would I find this information or what is needed from the company financial statements to aid me in coming up with the answer?

College Business

I have the following data: 40% debt, 10% preferred, and 50% common equity. After-tax cost of debt 4.00%, cost of preferred 7.50% and cost of retained earnings is 11.50% in using this formula: WACC = wdrd(1-T) + wprp + wcrs r=(40%)(4.00%)+(10%)(7.50%)+(50%)(11.50%)=8% Is this ...

Finance

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 13.00%. The firm will not be issuing ...

finance

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 12.75%. The firm will not be issuing ...

Finance

I'm struggling with being able to solve this question: A company wants to raise money in the capital markets. The firm intends to sell $18 million of common stock; the expected return is 15%. In addition, the company plans to issue $5 million of debt, the cost of this debt is ...

finance

Given: WACC= 12%, NPV=+1,491.39, IRR=14.87378%, your all-equity firm has 5,000 common shares outstanding, and the cash flows are: CF0= -18,000, CF1= 3,000 CF2= 3,000, CF3=7,000, CF4?, CF5= 10,000. What is the cash flow at time-point 4.

Finance

Jungle, Inc. has a target debt-equity ratio of 0.72. Its WACC is 11.5 percent and the tax rate is 34 percent. What is the cost of equity if the aftertax cost of debt is 5.5 percent?

Finance

Thompson Stores is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year Cash Flow 0 ($1,000) 1 $300 2 $295 3 $290 4 $...

Finance

You were hired as a consultant to ABC Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The before-tax cost of debt is 8.00%, the cost of preferred is 7.50%, and the cost of common is 12.75%. What is its WACC if the tax rate is 25%?

finance

Thompson stores is considering a project that has the following cash flow data. What is the project's IRR. Note that a project's projected IRR can be less than the WACC and even negative, in which case it wll be rejected. Year 0 ($1,000), year 1 $300, year 2 $295, year 3 $290...

finance

Smith Technologies is expected to generate $125 million in free cash flow next year, and FCF is expected to grow at a constant rate of 3% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 14%. If Smith has 45 million shares of stock outstanding, what...

Financial managemetn

A firm's cost of financing is equal to its: WACC, required yield that investors seek for various kinds of securities, required rate of return that investors seek for various kinds of securities, or all of these answers. I am tempted to pick all of these, but can not find all ...

Finance

You were hired as a consultant to Giambono Company, whose capital structure is 40% debt, 15% preferred stocks, and 45% common stock equity. The after-tax cost of debt is 6.00%, the cost of preferred stocks is 7.50%, and the cost of common stock equity is 13.00%. What is its WACC?

Corporate Finance

Suppose a company will issue new 5 year debt with a face value of $1000 and a coupon rate of 8 percent, paid annually.If the issuing price is $1080 and the tax rate is 40 percent.what is the after-tax cost of debt?If the expected rate of return of the company’s common stock ...

finance

the target capital structure for QM industries is 45% common stock, 5% preferred stock and 50% debt. If the cost of common equity for the firm is 18.9%, the cost of preferred stock is 10.7% and the before tax cost of debt is 7.7% and the firm's tax rate is 35% QM's WACC is_____

corporate finance

Life Balance, Inc. has found that its cost of common equity capital is 15 percent and its cost of debt capital is 9 percent. If the firm is financed with $6 million of common shares (market value) and $4 million of debt, what is the after tax weighted average cost of capital (...

Finance for Business

The taught capital structure for QM Industries is 45% common stock 7% preferred and 48% debt. If the cost of common equity for the firm is 17%, the cost of preferred stock is 10%, the before-tax cost of debt is 8.4% and the firm tax rate is 35%, what is the weighted average ...

Finance

The ACME Suction Cup company has $4,500 of debt and $10,500 of common stock equity. The total value of the company is $15,000. The company's cost of equity is 11.5 percent, the cost of debt is 5.9 percent and the relevant tax rate is 35 percent. What is ACME's debt-equity ...

Finance

Jungle, Inc., has a target debt−equity ratio of 0.84. Its WACC is 11.5 percent, and the tax rate is 34 percent. Required: (a) If Jungle's cost of equity is 14.5 percent, its pretax cost of debt is percent. (b) If instead you know the aftertax cost of debt is 6.5 percent...

Finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Because the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money ...

finance

templeton extended care facilities inc is considering the acquisition of a chain of cemeteries for $450 million. since the primary asset of this business is real estate, templeton's mangement has determined theat they will be able to borrow the majority of the money needed to ...

finance

Templeton Extended Care Facilities, INC. is considering the acquisition of a chain of cemeteries for $370 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

math

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $360 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed ...

finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $430 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

Finance

Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.15. Based on the CAPM approach, what is the cost of equity from retained earnings? Several years ago the ...

UOP

Templeton Extended Care Facilities, INC. is considering the acquisition of a chain of cemeteries for $370 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

Finance

To finanance a purchase a company will sell 10 year bonds paying 6.6% per year at the market price of $1062. Preferred stock paying a $2.05 dividend can be sold for 25.93. Common stock is cirrently seeling for 54.29 per share and the firm paid a 2.92 dividend last year. ...

finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $350 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $350 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $350 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed...

Finance Management

What is the Weighted Average Cost of Capital (WACC) for a firm where debt is 40% of the firm, preferred stock is 10% of the firm, common stock is 50% of the firm, after tax cost of debt is 8%, cost of preferred stock is 12%, and the cost of common stock is 18%?

University of Phoenix

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $370 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed ...

fin/370

The target capital structure for Jowers Manufacturing is 51% common stock, 20% preferred stock, and 29% debt. If the cost of common equity for the firm is 20.8%, the cost of preferred stock is 11.8%, and the before tax cost of debt is 10.8%, what is the cost of capital? The ...

Finance

Templeton Extended Care Facilities Inc, is considering the acauision of a chain of cemeteries for $450 million. Since the primary asset of the business is real estate, Templeton management has determined that they will be able to borrow the majority of the money needed to buy ...

finance

14–1. (Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be ...

math

Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to ...

Finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed ...

finamce

Define captital structure weights)Templeton extended care facilities, inc., is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templetons management has determined that they will be able to borrow ...

Finance

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined they will be able to borrow the majority of the money needed to buy...

finance

Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $410 million. Since the primary asset of this business is real estate, Templeton’s management has determined that they will be able to...

Finance ( PLEASE HELP)

You have been assigned the task of using the corparate ,or free cash flow , model to estimate Petry's Corporation intrinsic value. the firm WACC is 10.00% , its end of year cash flow ( FCF)IS EXPECTED TO BE 90.0 MILLION, THE FCFs are expected to grow at a constant rate of 5.00...

Investing ( pease help)

You have been assigned the task of using the corparate ,or free cash flow , model to estimate Petry's Corporation intrinsic value. the firm WACC is 10.00% , its end of year cash flow ( FCF)IS EXPECTED TO BE 90.0 MILLION, THE FCFs are expected to grow at a constant rate of 5.00...

Finance

3. Given the following information for Janicek Power Co., find the WACC. Assume the company’s tax rate is 35%. Debt: 8,500 7.2% coupon bonds outstanding, $1000 par value, 25 years to maturity, selling for 118% of par; the bonds make semiannual payments Common Stock: 225,000 ...

Finance

Problem # 1 WACC and optimal capital structure – Elliott Athletics is trying to determine its optimal capital structure, which now consists of only debt and common equity. The firm does not currently use preferred stock in its capital structure, and it does not plan to do so...

Finance

Spam Corp. is financed entirely by common stock and has a beta of 1.0. The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price-earnings ratio of 8 and a cost of equity of 12.5%. The company's stock is selling for $50. Now the...

finance

Carlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of $15,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,000 and $12,000 at the end of Years 1 and 2, respectively. Project L has an expected...

Finance ( NEED HELP BAD)

the equopiment to be used would be depreciated by the straight line method over its 3 yr life and would have a zero salvage value and no woking capital required . Revenues and othe operating cost are expected to be constant over the projects 3yr life However the products would...

finamce

(Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to ...

finance

(Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to ...

Business

Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to ...

finance

A conservative financing plan involves A. heavy reliance on debt B. heavy reliance on equity C. high degree of financial leverage D. high degree of combined leverage This question is making my brain hurt, it seems straight foward, but I am still rather inexperienced with basic...

Math

1. Bob’s Country Bunker (BCB), a chain of economically priced motels in the Midwestern United States has reviewed its current target structure of 40% debt and 60% equity. It can issue debt at a rate of 9%. The last dividend paid on its stock was $1.25. The company is doing ...

Financial Management (Math)

1. Bob’s Country Bunker (BCB), a chain of economically priced motels in the Midwestern United States has reviewed its current target structure of 40% debt and 60% equity. It can issue debt at a rate of 9%. The last dividend paid on its stock was $1.25. The company is doing ...

STOCKS & BONDS

Barrett Industries invests a large sum of money in R & D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing ...

Finance ( Need help )

Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of ...

Finance

Temple Corp. is considering a new project \vhose data are shown below. 'rhe equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required...

od

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. ...

Finance

Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a 7 percent coupon, ...

Finance

Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a 7 percent coupon, ...

economics

Part 1 A firm has the current liabilities and equity financing on its balance sheet. The firm has taxable income that puts it in a 38% federal tax bracket, and the state in which it operates levies a 6.5% income tax. Compute the firm’s weighted average cost of capital. ...

Corporate Finance

1. TexMex Products is considering a new salsa whose data are shown below. The equipment that would be used would be depreciated by the straight-line method over its 3-year life, would have zero salvage value, and no new working capital would be required. Revenues and other ...

finance

New project analysis You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The ...

Finance

Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3 year tax life and would be fully depreciated by the straight line method over 3 years but it would have a positve pre-tax salvage value at the end of year 3, when the project ...

Finance

Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3 year tax life and would be fully depreciated by the straight line method over 3 years but it would have a positve pre-tax salvage value at the end of year 3, when the project ...

Finance

2004, 2005, 2006, 2007 oAnalyze federal express working capital management. Explain why the company’s operating and cash cycles are currently optimized. If you think they are not optimized, explain why. *Analyze the company's working capital management based on their ...

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