Has a target capital structure of 50% debt and 50% common equity. Davola funds debt by issuing 20-year, 8.6% semi-annual coupon bonds that currently sell for $900. Davola Inc. expects to pay a $1.75 dividend at the end of this year, its expected constant growth rate is 5%, and its common stock sells for $25. Their tax rate is 25%. 1. What is Davola’s component cost of debt? 2. What is Davola’s component cost of equity? 3. What Davoloa’s WACC?

Cost of debt after tax is 7.3%

cost of equity is 12.35%

WACC is 9.83%

Explanation:

The cost of debt can be computed using the rate formula in excel.

The rate formula=rate(nper,pmt,-pv,fv)

the nper is the number of coupon payments the bond would make over its entire bond life i.e 20 years*2=40

pmt is the semiannual coupon=$1000*8.6%/2=$43

pv is the current price of $900

fv is the face value of $1000

=rate(40,43,-900,1000)=4.87%

yield =4.87%*2=9.74%

after tax cost=9.74%*(1-tax rate)=9.74%*(1-0.25%)=7.3%

The cost of equity:

share price=D*(1+g)/r-g

D is the dividend expected

g is the dividend growth rate

r is the cost of equity

r=(D*(1+g)/share price)+g

r=($1.75*(1+5%)/$25)+5%=12.35%

WACC=Ke*E/V+Kd*D/V

Ke is the cost of equity of 12.35%

E is 50% or 0.5

D is 50% or 0.5

V=0.5+0.5=1

Kd(after tax) =7.3%

WACC=(12.35%*0.5/1)+(7.3%*0.5/1)=9.83%

answer; operating revenues;

someone i feel is a leader in my life id have to say would be my mother because she has give me great advice in life and got me out of tough situations. some characteristics she has are creativity, honesty, commitment, respect for others, and communication. one example of a situation when she demonstrated leadership was when i was working late on homework and i started to get stressed and got upset, she asked me if i needed some , and she me with my work. she demonstrated communication and commitment.

i don't know if this is exactly what your looking for but i hope this !