Homework Helper

Not Rated (0)

$17/per page/

About Homework Helper

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Art & Design,Chemistry,Economics,Essay writing Hide all
Teaching Since: Apr 2017
Last Sign in: 328 Weeks Ago
Questions Answered: 3232
Tutorials Posted: 3232

Education

  • MBA,MCS,M.phil
    Devry University
    Jan-2008 - Jan-2011

  • MBA,MCS,M.Phil
    Devry University
    Feb-2000 - Jan-2004

Experience

  • Regional Manager
    Abercrombie & Fitch.
    Mar-2005 - Nov-2010

  • Regional Manager
    Abercrombie & Fitch.
    Jan-2005 - Jan-2008

Category > Business & Finance Posted 20 May 2017 My Price 8.00

WACC The following table gives

WACC The following table gives Foust Company’s earnings per share for the last 10 years. The common stock, 7.8 million shares outstanding, is now (1/1/09) selling for $65.00 per share. The expected dividend at the end of the current year (12/31/09) is 55% of the 2008 EPS. Because investors expect past trends to continue, g may be based on the historical earnings growth rate.

Year

EPS

Year

EPS

1999

$3.90

2004

$5.73

2000

4.21

2005

6.19

2001

4.55

2006

6.68

2002

4.91

2007

7.22

2003

5.31

2008

7.80

The current interest rate on new debt is 9%; Foust’s marginal tax rate is 40%; and its capital structure, considered to be optimal, is as follows:

Debt

$104,000,000

Common equity

156,000,000

Total liabilities and equity

$260,000,000

a. Calculate Foust’s after-tax cost of debt and common equity. Calculate the cost of equity as rs = D1/P0 + g.

b. Find Foust’s WACC.

 

View less »

Answers

Homework Helper
Not Rated (0)
Status NEW Posted 20 May 2017 10:05 AM My Price 8.00

Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k Y-----------ou -----------for----------- us-----------ing----------- ou-----------r w-----------ebs-----------ite----------- an-----------d a-----------cqu-----------isi-----------tio-----------n o-----------f m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l

Not Rated(0)