33.
Paper Exchange has 80 million shares of common stock outstanding, 60 million shares of
preferred stock outstanding, and 50 thousand bonds. If the common shares are selling for
$20 per share, the preferred shares are selling for $10 per share, and the bonds are selling
for 105 percent of par, what would be the weight used for preferred stock in the
computation of Paper’s WACC?
34.
Town Crier has 10 million shares of common stock outstanding, 2 million shares of
preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for
$28 per share, the preferred shares are selling for $15.50 per share, and the bonds are
selling for 97 percent of par, what would be the weight used for debt in the computation of
Town Crier’s WACC?
35.
Bill’s Boards has 20 million shares of common stock outstanding, 4 million shares of
preferred stock outstanding, and 20 thousand bonds. If the common shares are selling for
$30 per share, the preferred shares are selling for $17 per share, and the bonds are selling
for 96 percent of par, what would be the weight used for debt in the computation of Bill’s
WACC?
36.
Suppose that TipsNToes, Inc.’s capital structure features 40 percent equity, 60 percent
debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 15 percent.
If the appropriate weighted average tax rate is 34 percent, what will be TipsNToes’
WACC?
37.
Suppose that Model Nails, Inc.’s capital structure features 60 percent equity, 40 percent
debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 10 percent.
If the appropriate weighted average tax rate is 28 percent, what will be Model Nails’
WACC?
38.
Suppose that Hanna Nails, Inc.’s capital structure features 45 percent equity, 55 percent
debt, and that its before-tax cost of debt is 5 percent, while its cost of equity is 9 percent.
If the appropriate weighted average tax rate is 40 percent, what will be Hanna Nails’
WACC?
39.
Suppose that Glamour Nails, Inc.’s capital structure features 30 percent equity, 70 percent
debt, and that its before-tax cost of debt is 4 percent, while its cost of equity is 10 percent.
If the appropriate weighted average tax rate is 34 percent, what will be Glamour Nails’
WACC?
40.
TJ Industries has 7 million shares of common stock outstanding with a market price of
$20.00 per share. The company also has outstanding preferred stock with a market value
of $10 million, and 100,000 bonds outstanding, each with face value $1,000 and selling at
95 percent of par value. The cost of equity is 12 percent, the cost of preferred is 10
percent, and the cost of debt is 6.45 percent. If TJ’s tax rate is 34 percent, what is the
WACC?
41.
PNB Industries has 20 million shares of common stock outstanding with a market price of
$18.00 per share. The company also has outstanding preferred stock with a market value
of $50 million, and 500,000 bonds outstanding, each with face value $1,000 and selling at
97 percent of par value. The cost of equity is 15 percent, the cost of preferred is 12
percent, and the cost of debt is 8.50 percent. If PNB’s tax rate is 40 percent, what is the
WACC?
42.
PAW Industries has 5 million shares of common stock outstanding with a market price of
$8.00 per share. The company also has outstanding preferred stock with a market value of
$10 million, and 100,000 bonds outstanding, each with face value $1,000 and selling at 96
percent of par value. The cost of equity is 19 percent, the cost of preferred is 15 percent,
and the cost of debt is 9 percent. If PAW’s tax rate is 34 percent, what is the WACC?
43.
Suppose that TW, Inc. has a capital structure of 25 percent equity, 15 percent preferred
stock, and 60 percent debt. If the before-tax component costs of equity, preferred stock
and debt are 13.5 percent, 9.5 percent and 4 percent, respectively, what is TW’s WACC if
the firm faces an average tax rate of 30 percent?
44.
Suppose that PAW, Inc. has a capital structure of 60 percent equity, 10 percent preferred
stock, and 30 percent debt. If the before-tax component costs of equity, preferred stock
and debt are 17.5 percent, 12 percent and 6.5 percent, respectively, what is PAW’s WACC
if the firm faces an average tax rate of 28 percent?
45.
Suppose that TNT, Inc. has a capital structure of 43 percent equity, 23 percent preferred
stock, and 34 percent debt. If the before-tax component costs of equity, preferred stock
and debt are 15.4 percent, 10 percent and 7 percent, respectively, what is TNT’s WACC if
the firm faces an average tax rate of 28 percent?
46.
JAK Industries has 5 million shares of stock outstanding selling at $25 per share and an
issue of $40 million in 8 percent, annual coupon bonds with a maturity of 15 years, selling
at 108 percent of par ($1000). If JAK’s weighted average tax rate is 34 percent and its cost
of equity is 15 percent, what is JAK’s WACC?
47.
FDR Industries has 50 million shares of stock outstanding selling at $30 per share and an
issue of $200 million in 9.5 percent, annual coupon bonds with a maturity of 10 years,
selling at 105 percent of par ($1,000). If FDR’s weighted average tax rate is 28 percent and
its cost of equity is 16 percent, what is FDR’s WACC?
48.
XYZ Industries has 10 million shares of stock outstanding selling at $10 per share and an
issue of $30 million in 8.5 percent, annual coupon bonds with a maturity of 25 years,
selling at 102 percent of par ($1,000). If XYZ’s weighted average tax rate is 40 percent and
its cost of equity is 15 percent, what is XYZ’s WACC?
49.
Cup Cake Ltd. has 20 million shares of stock outstanding selling at $25 per share and an
issue of $30 million in 8 percent, annual coupon bonds with a maturity of 16 years, selling
at 98 percent of par ($1,000). If Cup Cake’s weighted average tax rate is 34 percent, its
next dividend is expected to be $2.00 per share, and all future dividends are expected to
grow at 4 percent per year, indefinitely, what is its WACC?
50.
Crab Cakes Ltd. has 5 million shares of stock outstanding selling at $15 per share and an
issue of $10 million in 10 percent, annual coupon bonds with a maturity of 25 years, selling
at 97 percent of par ($1,000). If Crab Cakes’ weighted average tax rate is 30 percent, its
next dividend is expected to be $1.00 per share, and all future dividends are expected to
grow at 5 percent per year, indefinitely, what is its WACC?
51.
Pumpkin Pie Industries has 5 million shares of common stock outstanding, 1 million
shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are
selling for $50 per share, the preferred shares are selling for $31 per share, and the bonds
are selling for 98 percent of par ($1,000), what would be the weights used in the
calculation of Pumpkin Pie’s WACC for common stock, preferred stock, and bonds,
respectively?
52.
Sea Shell Industries has 50 million shares of common stock outstanding, 10 million shares
of preferred stock outstanding, and 100 thousand bonds. If the common shares are selling
for $19 per share, the preferred shares are selling for $8.50 per share, and the bonds are
selling for 97 percent of par ($1,000), what would be the weights used in the calculation of
Sea Shell’s WACC for common stock, preferred stock, and bonds, respectively?