1) Suppose that MNINK Industries’ capital structure features 65 percent equity, 6 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.70 percent, 9.60 percent, and 9.00 percent, respectively.
What is MNINK’s WACC if the firm faces an average tax rate of 34 percent? (Round the answer to 2 decimal places.)
WACC _________________ %
2) TAFKAP Industries has 3 million shares of stock outstanding selling at $18 per share, and an issue of $20 million in 8.0 percent annual coupon bonds with a maturity of 20 years, selling at 102 percent of par. Assume TAFKAP’s weighted average tax rate is 34 percent and its cost of equity is 13.5 percent.
What is TAFKAP’s WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
WACC __________________ %
3) Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 13 percent while its cost of equity is 17 percent. Assume the appropriate weighted-average tax rate is 25 percent.
What will be JB’s WACC? (Round your answer to 2 decimal places.)
WACC _______________ %