Weighted average cost of income?
The following tabulation give yield per share information for the Foust Company during the
preceding 10 years. The firm’s adjectives stock, 7.8 million shares outstanding, is very soon (1/1/03)
selling for $65 per share, and the expected dividend at the end of the current year (2003) is
55 percent of the 2002 EPS. Because investors expect historic trends to verbs, g may be based
on the income growth rate. (Note that 9 years of growth are reflect contained by the information.)
YEAR EPS YEAR EPS
1993 $3.90 1998 $5.73
1994 4.21 1999 6.19
1995 4.55 2000 6.68
1996 4.91 2001 7.22
1997 5.31 2002 7.80
The current interest rate on latest debt is 9 percent. The firm’s marginal levy rate is 40 percent.
Its income structure, considered to be optimal, is as follows:
Debt $104,000,000
Common equity 156,000,000
Total liability and equity $260,000,000
a. Calculate Foust’s after-tax cost of unmarked debt and adjectives equity. Calculate the cost of equity
as ks D1/P0 g.
b. Find Foust’s weighted average cost of cap
Answers:
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http://buyingandsellingshares.blogspot.c...
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The simple route to do it is, stir to G00GLE type WACC and you wil find a formula and lately tag on ur info to formula and you wil procure answer of ur questioner.
hope it help
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preceding 10 years. The firm’s adjectives stock, 7.8 million shares outstanding, is very soon (1/1/03)
selling for $65 per share, and the expected dividend at the end of the current year (2003) is
55 percent of the 2002 EPS. Because investors expect historic trends to verbs, g may be based
on the income growth rate. (Note that 9 years of growth are reflect contained by the information.)
YEAR EPS YEAR EPS
1993 $3.90 1998 $5.73
1994 4.21 1999 6.19
1995 4.55 2000 6.68
1996 4.91 2001 7.22
1997 5.31 2002 7.80
The current interest rate on latest debt is 9 percent. The firm’s marginal levy rate is 40 percent.
Its income structure, considered to be optimal, is as follows:
Debt $104,000,000
Common equity 156,000,000
Total liability and equity $260,000,000
a. Calculate Foust’s after-tax cost of unmarked debt and adjectives equity. Calculate the cost of equity
as ks D1/P0 g.
b. Find Foust’s weighted average cost of cap
Answers:
check this association its good
http://buyingandsellingshares.blogspot.c...
.
The simple route to do it is, stir to G00GLE type WACC and you wil find a formula and lately tag on ur info to formula and you wil procure answer of ur questioner.
hope it help