The following financial statement data pertains to Outside, Inc., a manufacturer of men's outerwear (dollar amounts in millions): Total Assets $145,782 Interest-Bearing Debt $30,659 Average Pre-tax borrowing cost 9.25% Common Equity: Book Value $22,515 Market Value $60,843 Income Tax Rate 42% Market Equity Beta 0.88 Market Premium 8.5% The risk-free interest rate of 2.4%Determine the weight on debt capital that should be used to calculate Radek's weighted-average cost of capital. A. 20.65%B. 52.54%C. 26.03%D. 57.52%The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands. Total assets $8,731Interest-bearing debt $4,239Average borrowing rate for debt 10.0%Common equity:Book value $3,130Market value $16,284Marginal income tax rate 35%Market equity beta 1.33Determine the weight on equity capital that should be used to calculate Radek's weighted-average cost of capital. A. 42.48%B. 73.97%C. 47.46%D. 79.35%The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands. Total assets $8,731Interest-bearing debt $4,239Average borrowing rate for debt 10.0%Common equity:Book value $3,130Market value $16,284Marginal income tax rate 35%Market equity beta 1.33Calculate Radek's weighted-average cost of capital. A. 11.89%
B. 12.48%
C. 13.25%
D. 11.50%Wesley Corporation currently pays a $1.55 dividend and its current stock price is $53.50. Assuming the company’s cost of equity capital is 6% use the dividend discount valuation model to estimate the company’s growth rate.
A. 1.7%
B. 2.4%
C. 6.0%
D. 3.1%