2024 Equity dollars of financing, business and finance homework help

Equity dollars of financing, business and finance homework help

Business Finance Assignment Help 2024

The weighted average cost of capital formula (WACC) shown below is the accepted method of computing a firm’s cost of capital.

WACCadj = 
E x Re + PS x Rps + D x Rd X (1 – Tc)     V V V 

Where: 

E = Equity dollars of financing 

PS = Preferred Stock dollars of financing 

D = Debt (bond) dollars of financing 

V = Total financing = E +PS +D 

Re = % Cost of Common Stock 

Rps = % Cost of Preferred Stock 

Rd = % Cost of Debt after tax 

Tc = Effective tax rate 

After reviewing this formula, your reading assignments and the instructor’s PowerPoint presentation, in a one paragraph posting, answer the following questions and provide a short supporting rationale for each answer. The answer does not require a quantitative solution What impact will the following company actions have on the company’s weighted average cost of capital (WACC): 

1. An Increase in the company’s corporate tax rate? 

2. An Increase in the company’s flotation cost? 

3. An increase in the company’s dividend? 

Can you demonstrate your answer mathematically?