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Category > Business & Finance Posted 02 Jun 2017 My Price 8.00

ABC Co. and XYZ Co.

ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $450,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $225,000 and the interest rate on its debt is 6 percent. Both firms expect EBIT to be $51,000. Ignore taxes.

c.

What is the cost of equity for ABC and XYZ? (Round your answers to 2 decimal places. (e.g., 32.16))
  
   Cost of equity
  ABC %  
  XYZ %
 
   
d.

What is the WACC for ABC and XYZ? (Round your answers to 2 decimal places. (e.g., 32.16))
  
   WACC
  ABC %  
  XYZ %

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Status NEW Posted 02 Jun 2017 05:06 AM My Price 8.00

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