# [Weighted Average Cost of Capital] Refer to Problem 13 for Voice River, Inc. A. Estimate the WACC…

[Weighted Average Cost of Capital] Refer to Problem 13 for Voice River, Inc. A. Estimate the WACC if the cost of common equity capital is 20 percent. B. Estimate the WACC if the cost of common equity capital is at the representative target rate of 25 percent for typical ventures in their late rapid-growth life cycle stage. PROBLEM 13 [Weighted Average Cost of Capital] Voice River, Inc., is interested in estimating its WACC now that it is in its rapid-growth stage. Voice River has a \$500,000, 10 percent interest, short-term bank loan; a \$1.5 million, 12 percent interest, long-term debt issue; and \$42 million in common equity. The venture is in the 35 percent income tax bracket. A. Determine the after-tax costs of the bank loan and the long-term debt issue. B. Calculate the WACC for Voice River, Inc., using the cost of common equity capital estimated in Problem 12. PROBLEM 12 [CAPM Estimate of Cost of Equity Capital] Voice River, Inc., has successfully moved through its early life cycle stages and now is well into its rapid-growth stage. However, by traditional standards this provider of media-on-demand services is still considered to be a relatively small venture. The interest rate on long-term U.S. government securities is currently 7 percent. Voice River’s management has observed that, over the long run, the average annual rate of return on small-firm stocks has been 17.3 percent, while the annual returns on long-term U.S. government securities has averaged 5.7 percent. Management views Voice River as being an average smallcompany venture at its current life cycle stage. A. Determine the historical average annual market risk premium for small-firm common stocks. B. Use the CAPM to estimate the cost of common equity capital for Voice River.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.