Weighted average cost of capital FIN370

1.)Weighted average cost of capital
The target capital structure for QM industries is 40% common stock, 5% preferred stock and 55% debt. If the cost of common equity for the firm is 17.8%, the cost of preferred stock is 9.1% the before tax cost of debt is 8.6 and the frims tax rate is 35%, what is QM’s weighted average cost of capital
QMs WACC is _____$ Round to three decimal places
2.) Crypton Electronics has a capital structure consisting of 36% common stock and 64% debt. A debt issue of 1,000 par value, 5.6% bonds that mature in 15 years and pay annual interest will sell for 971$. Common stock of the firm is currently selling for 29.38 per share and the firm expects to pay $2.32 dividends next year. Dividends have grown at the rate of 5.1 per year and are expected to continue to do so for the foreseeable future. What is cryptons cost of capital where the firms tax rate is 30%

3.) Weighted average cost of capital-
The target capital structure for Jowers Manufacturing is 54% common stock, 15% preferred stock, and 31% debt.  If the cost of common equity for the firm is 19.3%, the cost of preferred stock is 12.1%, and the before tax cost of debt is 10.6% what is Jowers’ cost of capital? The firms tax rate is 34%
Jowers WACC is ____% (Round to three decimal places)

4.) Weighted Average cost of capital-
As a member of the Finance Department of Ranch Manufactoring, your supervisorhas asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant.  Under the assumption that the firms present capital structure reflects the appropriate mi of capital sources for the firm, you have determined the market value of the firms capital structure as follows:
To finance the purchase, Ranch Manufacturing will sell  10 year bonds paying 6.8% per year at the market price of 1034. Preferred stock paying a 2.05 dividend can be sold for 24.21. Common stock for Ranch Manufacturing is currently selling for 54.62 per share and the firm paid a 3.09 dividend last year. Dividends are expected to continue growing at a rate of 5.1% per year into the indefinite future.  If the firms tax rate is 30% , what discount rate should you use to evaluate the equipment purchase?
Ranch Manufacturing WACC is ____% (Round to three decimal places)

 

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