Problem 13.05 – Calculating WACC
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Given the information on WTC… figure out the WACC.
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Given the information on WTC… figure out the WACC.
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Find the expected return given three states of the economy and the corresponding return if that state occurs.
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Given the equity beta, treasury bill rate, and market risk premium… find the asset beta and the WACC.
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Compare two different capital structures for a corporation. Plan I has a specific number of shares and a certain amount of debt, while Plan II has a different number of shares and a different amount of debt. The interest rate on the debt is constant. Calculate the price per share of equity under both Plan I and Plan II, assuming no taxes.
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Find the portfolio’s expected return given information on Stock G, J, and K.
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Find the portfolio beta with the given information on stocks Q, R, S, and T.
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Find the beta for the other stock in the portfolio if the portfolio is evenly invested in two stocks and the risk-free asset.
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Given the borrowing rate, cost of equity, the value of the firm, the amount borrowed, and the tax rate… find the new value of the firm if the firm borrows and uses the proceeds to repurchase shares.
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Given the tax rate and interest paid… find the interest tax shield.
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Given the tax rate and interest paid… find the interest tax shield.
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