A company has a target debt-equity ratio of 0.57. The yield to maturity on its bonds is 11 percent. Its cost of equity is 17 percent. The corporate income tax rate is 32 percent. Calculate the WACC for this company.

13.54%

Explanation:

Debt Equity Ratio (Debt/Equity)=0.57

Yield to Maturity (YTM) on bonds (Cost of Debt) (Kd) = 11%

Cost of Equity (Ke) = 17%

Income Tax Rate= 32%

Computation of WACC

Particulars   Proportion (1)     Cost (2)    Weighted Cost (1*2)

Equity                0.6369                 17                   10.8273

Bond (Debt)       0.3631                 7.48               2.7160

Total                        1                                            13.5433

Therefore, the WACC of Company= 13.54%

Working Note 1

Computing Proportion

Debt/Equity=0.57

Therefore Debt= 0.57 Equity

Lets assume Equity = 10

So Debt = 5.7

Hence, Proportion is as follows:  

Equity= 10/15.7 =0.6369

Debt= 5.7/15.7 = 0.3631

Working Note 2

After tax cost of Debt = 11 * (1 - 0.32)

After tax cost of Debt = 11 * 0.68

After tax cost of Debt = 7.48%

net worth is the difference between what you own and what you have. if you exceed your liabilities you have a positive net worth. if your liabilities are greater than your assets you have a negative net worth. its a snapshot of your financial situation. if you calculate your net worth you will see the end result of everything you've earned and spent as of now. net worth statements and all you asked of can you determine where you are, how to get where you want to be, if your spending   to much. honestly it can tell you a lot of things. i can go on, but you can paint the picture from here.

explanation:

years agooo ahaha. but honestly they need to update ! : )