12) A firm has 1,250 bonds outstanding with a market value of $980 each. The pretax...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
12) A firm has 1,250 bonds outstanding with a market value of $980 each. The pretax cost of debt is 7.2 percent. The firm also has 46,000 shares of common stock outstanding at a price per share of $32 and a beta of 1.21. The risk-free rate is 2.4 percent, the market risk premium is 7.3 percent, and the tax rate is 21 percent. What is the company's WACC? A) 9.03% B) 9.79% C) 10.54% D) 8.29% E) 8.71% 12) A firm has 1,250 bonds outstanding with a market value of $980 each. The pretax cost of debt is 7.2 percent. The firm also has 46,000 shares of common stock outstanding at a price per share of $32 and a beta of 1.21. The risk-free rate is 2.4 percent, the market risk premium is 7.3 percent, and the tax rate is 21 percent. What is the company's WACC? A) 9.03% B) 9.79% C) 10.54% D) 8.29% E) 8.71%
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
What are the types of production systems in aquaculture?
-
Wells Fargo & Company, headquartered in San Francisco, is one of the nations largest financial institutions. It reported the following selected accounts (in millions) as of December 31, 2009....
-
The average daily amounts of time (in minutes) spent on Snapchat In Exercises 4952, approximate the mean of the frequency distribution. Time Spent (in minutes) Frequency 0-19 8 20-39 8 40-59 15 60-79...
-
In a cycle, every vertex has degree two. a. True b. False
-
The three accounts shown below appear in the general ledger of Lauber Corp. during 2014. Instructions From the postings in the accounts, indicate how the information is reported on a statement of...
-
E 8 - 1 5 ( Algo ) Preparing Budgeted Income Statement [ LO 8 - 3 h ] Ceder Company has compiled the following data for the upcoming year: Sales are expected to be 1 4 , 5 0 0 units at $ 5 0 each....
-
Heads in Tosses of a Random Coin Let be a random proportion with a prior distribution that is beta . Given , let be i.i.d. Bernoulli . a) Plot the prior density of
-
Implement the logic function F = w'xy+wx+wxy' with the following component constraints: (a) Use one 4-to-1 multiplexer and one invertor. (b) Use one 2-to-1 multiplexer and one 2-inputs XOR gate.
-
How does current archaeological research shed light on old issues based on the essay Archaeologists Are Seeing Cave Art in a New Light
-
Input from the CKP is critical to the operation of the ignition system. This input is also used by the PCM to determine if a misfire has occurred. Explain how the PCM does this?
-
MCgel Corp. consumes 300,000 units of spare part V per year. The average purchase lead time is 20 working days. The company's annual operations covers 240 days allowing for shutdowns for plant...
-
In the matrix of pressures for cost reduction vs pressures for local adaptation which is the best strategy that allows MNCs to learn from subsidiaries and transfer knowledge between these...
-
delve into the meaning of statistical significance, how it is calculated, and its implications for making inferences about populations based on sample results. Begin by defining statistical...
-
Prairie Outfitters, Inc., a retailer, accepts paymnent through credit cards. During August, credit card sales amounted to $12,000. The processor charges a 3% fee. Assuming that the credit card...
-
What are the four major categories of ethical conduct that must be adhered to by CMAS?
-
What actions should a CMA take when the es- tablished policies of the organization do not resolve an ethical conflict?
-
Order point Phoenix Company expects daily usage of 500 lbs. of material Z, an anticipated lead time of seven days, and a desired safety stock of 2,500 Ibs. a. Determine the order point. b. Determine...
Study smarter with the SolutionInn App