Question

Calculate weighted-average cost of capital for a firm with the following current conditions. Its marginal tax...

Calculate weighted-average cost of capital for a firm with the following current conditions. Its marginal
tax rate is 30.00%. It has 30 million shares of common stock outstanding that trade for \$19.20/share. The
yield to maturity on 10-year US Treasury Bonds is 3.00%. The firm's equity beta is 1.4. The expected return
on the market is 11.00%. The firm's bonds have a 6.50%/yr. coupon rate and \$1,000 face value, pay semiannual
coupons, and mature in 15 years. There are 200,000 bonds outstanding and they sell in the open market
for \$960.00/bond.

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
• QUESTION 6 Calculate Weighted Average Cost of Capital using a corporate tax rate of 35% •...

QUESTION 6 Calculate Weighted Average Cost of Capital using a corporate tax rate of 35% • Debt Number of bonds outstanding - 10,000 price per bond 51,165 o par value per bond - \$1,000 o coupon rate=6% (paid annually) • Years to maturity - 10 • Common Stock Number of shares outstanding - 1,000,000 o Price per share - \$25 o Book value per share - \$15 O Beta-1.4 O Risk free rate 4.5% • Market risk premium - 5%...

• Given the following information for Stellar Corporation, find the WACC (weighted average cost of capital). Assume...

Given the following information for Stellar Corporation, find the WACC (weighted average cost of capital). Assume that the company's tax rate is 40%. Common Stock: 15 million shares outstanding, selling for \$5 per share; the beta is 1.05 Preffered Stock: 5 million shares outstanding, selling for \$4.5 per share, pays \$ 0.9 annually per share. Debt: 1 million 8% quarter coupon bonds outstanding, \$100 face value, 15 years to maturity, selling at par. Market: 6.5% market return and 4.5% risk-free...

• What is the weighted average cost of capital for SKYE Corporation given the following information? Equity...

What is the weighted average cost of capital for SKYE Corporation given the following information? Equity Shares Outstanding....... 1million Stock price per share....... \$30.00 Yield to maturity on debt...... 7.68% Book value of interest bearing debt....... \$10 million Coupon interest rate on debt....... 9% Interest rate on govenrment bonds..... 6% SKYE's equity beta...... 0.75 Historical Excess return on stocks...... 6.3% Tax rate...... 40%

• Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00%...

Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 25.00% Preferred Stock 8.00% Equity 67.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info (Annual Coupons) Preferred Divided 2 Current Dividend \$3.00 Time to Maturity (years) 10 Current Market Price 45 Current Price \$81.00 Coupon Rate APR 6.00% Preferred Yield 4.44% Expected Growth in Dividends 3.00% Face Value \$1,000.00 Expected Return on Equity 6.81% Current Market Price \$1,000.00 YTM...

• Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00%...

Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00% Preferred Stock 2.00% Equity 63.00% Tax Rate = 35.00% WACC = Outstanding Bond Preferred Stock Info Common Stock Info (Annual Coupons) Preferred Divided 3 Current Dividend \$2.00 Time to Maturity (years) 10 Current Market Price 50 Current Price \$81.00 Coupon Rate APR 6.00% Preferred Yield 6.00% Expected Growth in Dividends 3.00% Face Value \$1,000.00 Expected Return on Equity 5.54% Current Market Price \$975.00 YTM...

• Estimating Weighted-Average-Cost-of-Capital You are about to start to consider a batch of new capital budgeting projects....

Estimating Weighted-Average-Cost-of-Capital You are about to start to consider a batch of new capital budgeting projects. Before you begin you need to estimate your company's Weighted-Average-Cost-of-Capital (WACC). The firm operates in the 35% marginal tax bracket. There are four sets of sheet. Calculate the WACC including all four classes of liabilities. A. There are 5,760,000 shares of common stock outstanding. These are trading at \$52.36 per share. You have decided to use the Gordon Growth Model to estimate the retun...

• 5. Advertising firm Harry Davis Industries has asked you to estimate its weighted average cost of...

5. Advertising firm Harry Davis Industries has asked you to estimate its weighted average cost of capital. To that end, they have provided you with the following information: Tax rate is 40% Harry Davis can issue bonds with a 12% semiannual coupon, a \$1000 par value, and a 15 year maturity, at a price of \$1153.72 net of floatation costs. The firm has no preferred stock. The firm's common stock is currently selling at a price of \$50 per share....

• Use the following information about a firm to estimate the firm’s weighted average cost of capital....

Use the following information about a firm to estimate the firm’s weighted average cost of capital. The firm has 4 million shares of common stock outstanding, trading at the price of \$58 per share The firm currently has 175,000 shares of debt that are currently trading at \$858 per share with a coupon payment paid semiannually at 5%, 7% yield to maturity, and 10 years to maturity with a par value of \$1,000 The risk-free rate is 1.1% The expected...

• Advertising firm Harry Davis Industries has asked you to estimate its weighted average cost of capital....

Advertising firm Harry Davis Industries has asked you to estimate its weighted average cost of capital. To that end, they have provided you with the following information:  Tax rate is 40%  Harry Davis can issue bonds with a 12% semiannual coupon, a \$1000 par value, and a 15 year maturity, at a price of \$1153.72 net of floatation costs.  The firm has no preferred stock.  The firm’s common stock is currently selling at a price of...

• Blueprint 6.  6: The Cost of Capital: Weighted Average Cost of Capital Quantitative Problem: Barton Industries expects...

Blueprint 6.  6: The Cost of Capital: Weighted Average Cost of Capital Quantitative Problem: Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 10.3%, the firm's cost of preferred stock, rp, is 9.5% and the firm's cost of equity is 12.9% for...