Solved: Long-term debt and common equity, Finance Basics

+44 141 628 6080
[email protected]

Long-term debt and common equity

Problem:

American Widget company has total capital, consisting of long-term debt and common equity, of $120 million. Fifty million of total capital is in the form of long-term debt, which carries a cost of 10 percent. The company's equity carries a cost of 16 percent. If the company's tax rate is 35 percent, what is the WACC?

Solution Preview :

Prepared by a verified Expert

Finance Basics: Long-term debt and common equity

Reference No:- TGS01807218

Now Priced at $20 (50% Discount)

Recommended (96%)

Rated (4.8/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Finance Basics

Q : Legal perspective-negligence and the titanic

Legal Perspective-Negligence and the Titanic the sinking of the Titanic in 1912, in which more than 1,500 passengers died, was a tragedy that time.

Q : Is it important to know your company wacc

Is it important to know your company's WACC? Why or why not? How might management decisions impact the WACC?

Q : What is a likely range for the p-value

What is a likely range for the p-value of this test given the information in the article (less than 5%, greater than 5%, etc.)?

Q : Classical theories of international trade

What are some of the factors managers might need to consider when assessing the comparative advantage of various locations around the world?

Q : Long-term debt and common equity

American Widget company has total capital, consisting of long-term debt and common equity, of $120 million.

Q : Design your training program

Assume you have been hired as a training consultant by a medium sized technology company. Your client company has asked you to develop and make a presentation

Q : In what sense is the wacc an average cost

In what sense is the WACC an average cost? A marginal cost?

Q : What is the mean number of blank pixels per square foot

What is the mean number of blank pixels per square foot? b) What is the standard deviation of blank pixels per square foot?

Q : Greenleafs principles of servant leadership

Think about Greenleaf's principles of servant leadership and what you have learned about the biblical foundation of servant leadership.

1922371

Questions
Asked

3,689

Active Tutors

1422133

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Asked Questions

Problem concerning the racial formations

According to Reading #1, "Racial Formations," how is the Brazilian system of racial identification different from the American system?

Unique forms of social change on numerous fronts

Question: Presently, we are experiencing such unique forms of social change on numerous fronts in the United States.

Examining the role that love has in american culture

When examining the role that love has in American culture, we find that a. love is less important in mate selection in America than it is in Europe

Key components to community-oriented policing

There are three key components to community-oriented policing. The first is community partnerships. This is when the community and law enforcement

Description of the team observed for the activity

Observing Task and Social Behaviors located at the end of chapter 4 (p. 82) in the Levi text. Based on your analysis of a team or group

Testing effects of hospitality employment on property crime

Article 5: Testing Effects of Hospitality Employment on Property Crime in the United States

Give example of racial difference being discussed

Question: One example of racial difference being discussed in the world is the concept of racial profiling.