Financial Accounting questions

Quiz#17

(Wd)(Kd) + (Wpfd)(Kpfd) + (We)(Ke)

1. The capital structure (Wd, Wpfd, and We) of Tucker Company is 40%, 20%, and 40%, and the cost of the bonds, preferred stock, and common stock (Kd, Kpfd, and Ke) is 8%, 5%, and 12%. Calculate the Weighted Average Cost of Capital (WACC). Use a 22% corporate tax rate for the sixteen problems. Kd = (.08*1-.22) = (.08 * .78) = 0.0624 Kd

(.40)Wd (0.0624) Kd + (.20)Wpfd (.05)Kpfd + (.40)We (.12) Ke = 8.30%

2. The capital structure weights of XYZ company are 15%, 25%, and 60%. The costs are 5.00%, 4.50%, and 14.00%. Calculate the WACC for the company. Kd=(.05*1-.22) = (.05*.78) = 0.038

(.15)Wd (0.038)Kd + (.25)Wpfd (.0450)Kpfd +(.60)We (.14)Ke = 0.10095 = 10.10%

3. The capital structure weights of Bozo company are 20%, 0%, 80%. The costs are 6%, 0%, and 12%. Calculate the WACC for the company. Kd = (.06*1-22) = (.06*.78) = 0.0468

(.20)Wd (0.0468)Kd + (0.0)Wpfd (0.0)Kpfd + (.80)We (.12)Ke = .10536 = 10.54%

4. The capital structure weights of Zebra Company are (Wd, Wpfd, and We) 25%, 25%, and 50%. (Kd, Kpfd, and Ke) The costs are 3%, 4%, and 10%. Calculate the WACC for the company. Kd = (.03 *1 - .22) = (.03 *.78) = 0.0234

(0.25) Wd (0.0234)Kd + (.25)Wpfd (0.04)Kpfd + (0.50)We (0.10)Ke = 0.06585 = 6.59%

5. The capital structure weights of Lion Corporation are 15%, 15%, and 70%. The costs are 6%, 3%, and 9%. Calculate the WACC for the company. Kd = (.06 *1 - .22) = (.06 * .78) = 0.0468

(.15)Wd (0.0468)Kd + (.15)Wpfd (0.03)Kpfd + (.70)We (.90)Ke = 0.64152 = 64%

6. The capital structure weights of Bear Corporation are 40%, 10%, and 50%. The costs are 5.50%, 4.50%, and 10%. Calculate the WACC for the company. Kd= (0.0550 *1 - .22) = (.0550 * .78) = 0.0429

7. The capital structure weights of Bull Corporation are 20%, 0%, and 80%. The costs are 4%, 0%, and 10%. Calculate the WACC for the company.

8. The capital structure weights of Zebra Corporation are 20%, 20%, and 60%. The costs are 5%, 3%, and 9%. Calculate the WACC for the company.

9. The capital structure weights of ABC company are 15%, 15%, and 70%. The costs are 4.00%, 3.50%, and 11.00%. Calculate the WACC for the company.

10. The capital structure weights of Clown company are 30%, 0%, 70%. The costs are 5%, 0%, and 12%. Calculate the WACC for the company.

11. The capital structure weights of Stripes Company are 20%, 30%, and 50%. The costs are 3%, 4%, and 10%. Calculate the WACC for the company.

12. The capital structure weights of Tiger Corporation are 18%, 12%, and 70%. The costs are 5.50%, 3.50%, and 12%. Calculate the WACC for the company.

13. The capital structure weights of Cub Corporation are 45%, 10%, and 45%. The costs are 4.50%, 5.00%, and 13%. Calculate the WACC for the company.

14. The capital structure weights of Horn Corporation are 20%, 0%, and 80%. The costs are 4%, 0%, and 12%. Calculate the WACC for the company.

15. The capital structure weights of Rhino Corporation are 25%, 10%, and 65%. The costs are 6.50%, 5%, and 10%. Calculate the WACC for the company.

16. The capital structure weights of 123 company are 25%, 5%, and 70%. The costs are 4.00%, 5.50%, and 14.00%. Calculate the WACC for the company.