Business Finance
Macomb Community College Chapter 10 Coleman Technologies Inc Case Study

Question Description

Can you help me understand this Business question?

Read the case and answer all those questions showing on the pictures. All the formula are giv

Macomb Community College Chapter 10 Coleman Technologies Inc Case Study
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Macomb Community College Chapter 10 Coleman Technologies Inc Case Study
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Macomb Community College Chapter 10 Coleman Technologies Inc Case Study
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Running head: COLEMAN TECHNOLOGIES INC.

1

Coleman Technologies, Inc.
A. (1) What sources of capital should be included when you estimate Coleman’s WACC?
Because the weighted average cost of capital is typically concerned with long-term matters, it
would make sense to analyze whatever forms of capital are utilized in order to pay for assets that
last a long time. In the case of Coleman, this would be both common and preferred stock as well as
long-term debt in the form of bonds.
B. What is the market interest rate on Coleman’s debt and its component cost of debt?
As the below formula in Excel shows, the semiannual market interest rate of Coleman’s debt is 5%.

This would then need to be doubled to reach the annual market interest rate of 10%. Finally, the
component...

seyswho (483)
UT Austin

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