David Ortiz has struck out in his last three at bats. He assures the trainers that he is feeling well.
Is the next at bat a good time to bet that he will get a hit?
Solution
No the probabiity of the hit is less as last 3 times he has hit and no one coulb be that
perfect to hit 4 consecutive times.
David Ortiz Motors has a target capital structure of 45 debt and 55.pdf
1. David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to
maturity on the company's outstanding bonds is 10%, and the company's tax rate is 40%.
Ortiz's CFO has calculated the company's WACC as 8.86%. What is the company's cost of
equity capital? Round your answer to two decimal places.
Solution
WACC=Wd x Cost of Debt x (1- tax rate)+ We x Cost of Equity
WACC
= {(45 * 10) x (1-0.40) + (55*X )}/100 = 8.86
=45 x 0.60 +55x=8.86
=27 + 55x=8.86
By multiplying both the sides of equation by 100, we get:
270+ 55X = 886 ... OR
55X = 886 - 270... OR
55X = 616... OR
X = 616/55 = 11.2 (%)