Business Finance Help for College and University Students

Calculating after tax cost of debt.

A company is trying to determine its cost of debt. It has a debt issue outstanding with seven years to maturity that is quoted at 106% of face value. The issue makes semiannual payments and has an embedded cost of 8.5% annually. What is the company's pretax cost of debt? If the tax rate is 38 percent, what is the aftertax cos ...continues

Finding the WACC.

Walk me through this problem: A company's tax rate is 35%, what is the WACC using the followiong info: Debt: 6,000 9% coupon bonds outstanding, $1000.00 par value, 10 years to maturity, selling for 104% of par, the bonds make seminannual payments. Common stock: 90,000 shares outstanding, selling for $75.00 per share, bet ...continues

WACC and NPV

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Calculating cost of debt.

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Calculating cost of equity using DCF and SML

Walk me through the attached problem. Goetzmann Industries stock has a beta of 1.2. The company just paid a dividend of $.80, and the dividends are expected to grow at 5 percent. The expected return of the market is 13 percent, and Treasury bills are yielding 6 percent. The most recent stock price for Goetzmann is $53. a. Ca ...continues

Returns on stocks, bonds, preferred stock and market

1. Suppose a stock had an initial price of $84 per share, paid a dividend of $2.25 per share during the year, and had an ending share price of $92. What was the dividend yield? What was the capital gains yield? What was the total return? 2. You bought one of Acme Corporation's 8 percent coupon bonds one year ago for $960.00. T ...continues

Stock returns, WACC, Cash cycles

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Cash Flow Budgets, Cash Balances, Payments and Discounts

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EBIT, Leverage, taxes, Break-even EBIT

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Calculating WACC

A company has a debt-equity ratio of 1.5. Its WACC is 14%, and its cost of debt is 9%. There is no corporate tax. A. What is the company's cost of equity capital? B. What would the cost of equity be if the debt-equity ratio were 1.0? What if it were 0.5? What is it were 0?