This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Rogue River Retail Inc. has a before-tax cost of debt of 8.00, a cost of equity of 12.00, a tax rate ... (Read 114 times)

DyllonKazuo

  • Hero Member
  • *****
  • Posts: 565
on: Jul 11, 2018
Rogue River Retail Inc. has a before-tax cost of debt of 8.00, a cost of equity of 12.00, a tax rate of 30.00 and no preferred stock outstanding. If the firm is made up of 50 debt and 50 equity, what is the firm's after-tax cost of borrowing?
 
  A) 12.00
  B) 11.60
  C) 8.00
  D) 5.60

Question 2

Financial theory suggests and empirical evidence supports the idea that firms have apecking order by which they choose to raise funds to finance assets. From the first source of financing to the last this pecking order is:
 
  A) internally generated funds, debt, and new equity.
  B) debt, internally generated funds, and equity.
  C) equity, debt, and internally generated funds.
  D) None of the above, there is no such preference.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

ttt030911

  • Sr. Member
  • ****
  • Posts: 315
Reply #1 on: Jul 11, 2018
Answer to Question 1

D
Explanation: D) = Kd (1-t) = 8  (1-.3 ) = 5.60.

Answer to Question 2

A


DyllonKazuo

  • Member
  • Posts: 565
Reply 2 on: Jul 11, 2018
Thanks for the timely response, appreciate it

TheNamesImani

  • Member
  • Posts: 334
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

There are immediate benefits of chiropractic adjustments that are visible via magnetic resonance imaging (MRI). It shows that spinal manipulation therapy is effective in decreasing pain and increasing the gaps between the vertebrae, reducing pressure that leads to pain.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

Did you know?

In 1835 it was discovered that a disease of silkworms known as muscardine could be transferred from one silkworm to another, and was caused by a fungus.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

The platypus is very difficult to spot even on the surface of a river. The platypus is very difficult to spot even on the surface of a river.
A nurse adjusts the rate of a client’s IV. A nurse adjusts the rate of a client’s IV.
Rate enhancement by entropy reduction Rate enhancement by entropy reduction
Cost of Laptops Cost of Laptops
If a graph has the following x-intercepts, which value of x is the instantaneous rate of change ... If a graph has the following x-intercepts, which value of x is the instantaneous rate of change ...
A Platypus swimming in Broken River, Eungella National Park, Queensland, Australia. A Platypus swimming in Broken River, Eungella National Park, Queensland, Australia.
Video: Biological organic compounds

For a complete list of videos, visit our video library