The target capital structure of Traggle Co. is 50% debt, 10% preferred equity, and 40% common equity. The interest rate on debt is 6%, the yield on the preferred is 7%, the cost of common equity is 11.5%, and the tax rate is 40%. Traggle does not anticipate issuing any new stock. What is Traggle's weighted-average cost of capital?
参考答案(由小熊题库网聘请的专业题库老师提供的解答)
请点击↑↑↑ 查看官方参考答案 按钮
习题解析
请点击 查看官方参考答案 按钮
您可能感兴趣的题目
1 .With respect to the penalty for aiding and abetting understatements of tax liability on a tax return:
A Applies only when the understatement is with the knowledge and consent of the persons authorized or required to file the return. B The civil penalty is USD10,000 for all taxpayers except corporations and USD100,000 for corporations. C The penalty applies to tax return preparers only. D The burden ...
2 .A company has a required rate of return of15% for five potential projects. The company has a maximum of USD500,000available for investment and cannot raise any capital. Details about the fiveprojects are as follows: Project Initial outlay Net present value at 15% Internal rate of return 1 USD500,000 USD125,000 23% 2 250,000 75,000 17% 3 150,000 25,000 35% 4 100,000 50,000 25% 5 150,000 50,000 25% The company should choose which of the following projects?
A Projects 3, 4, and 5 only. B Project 1 only. C Projects 2, 4, and 5 only. D Projects 2, 3, and 4 only.
3 .A civil fraud penalty can be imposed on a corporation that underpays tax by:
A Filing an incomplete return with an appended statement, making clear that the return is incomplete. B Omitting income as a result of inadequate recordkeeping. C Maintaining false records and reporting fictitious transactions to minimize corporate tax liability. D Failing to report income it errone...
4 .A firm that designs its cost structure to include a higher degree of operating fixed costs than variable costs by electing to pay salaries instead of commissions, is magnifying the impact of each additional sales dollar using the concept of:
A Operating leverage. B Fixed leverage. C Financial leverage. D Combined leverage.
5 .Which of the following statements is correct for disciplinary action by the AICPA and state CPA societies?
A The AICPA and state CPA societies can sanction their members and, in addition, can suspend or permanently revoke a CPA's license. B The Joint Trial Board of the AICPA can expel a member by majority vote. C The AICPA cannot suspend or terminate membership for failure to pay dues but can suspend or ...
7 .Which of the following bodies has the authority to suspend or revoke a CPA's license for acts discreditable to the profession?
A The Public Company Accountancy Oversight Board. B The state society of certified public accountants. C The American Institute of Certified Public Accountants. D The state board of accountancy.
8 .Larson Corp. issued USD20 million of long-term debt in the current year. What is a major advantage to Larson with the debt issuance?
A The increased financial risk resulting from the use of the debt. B The reduced earnings per share possible through financial leverage. C The relatively low after-tax cost due to the interest deduction. D The reduction of Larson's control over the company.
9 .Under the Sarbanes-Oxley Act of 2002, which of the following statements is correct regarding an issuer's audit committee financial expert?
A If an issuer does not have an audit committee financial expert, the issuer must disclose the reason why the role is not filled. B The issuer must fill the role with an individual who has experience in the issuer's industry. C The issuer's current outside CPA firm's audit partner must be the audit ...
10 .Youngsten Electric is contemplating new projects for the next year that will require USD30,000,000 of new financing. In keeping with its capital structure, Youngsten plans to use debt & equity financing as follows:? Issue USD10,000,000 of 20-year bonds at a price of 101.5, with a coupon of 10%, and flotation costs of 2.5% of par value.? Use internal funds generated from earnings of USD20,000,000.The equity market is expected to earn 15%. U.S. treasury bonds currently are yielding 9%. The beta coefficient for Youngsten's common stock is estimated to be 0.8. Youngsten is subject to a 40% corporate income tax rate. Youngsten has a price/earnings ratio of 10, a constant dividend payout ratio of 40%, and an expected growth rate of 12%.Assume Youngsten has an after-tax cost of debt of 9% and an after-tax cost of equity of 15%. Youngsten's weighted average cost of capital is:
A 13.0% B 11.0% C 11.8% D 12.0%
