A firm has 3,000,000 shares of common stock trading at $42.48 per share. It also has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A firm has 3,000,000 shares of common stock trading at $42.48 per share. It also has 65,000 bonds outstanding (par of $1,000) that are trading at $691 each. The bonds mature in 36 years, have a coupon rate of 8.25%, and pay coupons semi- annually. The firm's beta is 1.24, the risk-free rate is 3.25%, and the market risk premium is 7.2%. The tax rate is 36%. What is the firm's WACC? A firm has 3,000,000 shares of common stock trading at $42.48 per share. It also has 65,000 bonds outstanding (par of $1,000) that are trading at $691 each. The bonds mature in 36 years, have a coupon rate of 8.25%, and pay coupons semi- annually. The firm's beta is 1.24, the risk-free rate is 3.25%, and the market risk premium is 7.2%. The tax rate is 36%. What is the firm's WACC?
Expert Answer:
Answer rating: 100% (QA)
Market value of common stocks3000000X4248127440000 Market value of Deb... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting The Financial Chapters
ISBN: 978-0134486857
6th edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these finance questions
-
A firm has 1 million shares of common stock outstanding with a book value of $5 per share. The firm also has total assets with a book value of $10 million. There is no preferred stock. What are the...
-
A firm has 2,000,000 shares of common stock outstanding with a market price of $2.00 each. It has 2,000 bonds outstanding, each with a market value of $1,200 (120 percent of face). The bonds mature...
-
The company had 50,000 shares of common stock outstanding throughout the year. In addition, as of January 1, the company had issued 100 convertible bonds ($1,000 face value, 10%). The company has no...
-
Examine the major components of a marketing plan.
-
A value-added tax has been the subject of much debate in recent years as a tax to use to help reduce the deficit. Various forms of value-added taxes are used throughout Europe, Canada, and in many...
-
1. Why did IBM drop Siebel and implement SugarCRM? 2. Why do you think IBM waited several years before switching to SugarCRM? 3. How have the CRM needs of IT software companies changed over time? How...
-
Many sample motions can be found using a basic web search. Search for an actual motion to continue a trial or hearing date pertaining to a civil case in California. The party moving to continue must...
-
The following balances come from the trial balance of Wilson State College as of the end of the 2020 fiscal year. Required a. Prepare a statement of revenues, expenses, and changes in net position...
-
On June 1, 2023, a company began construction of a new manufacturing plant. The plant was completed on October 31, 2024. Expenditures on the project were as follows ($ in millions): July 1, 2023 58...
-
Olathe Company exchanges old delivery equipment for new delivery equipment. The book value of the old delivery equipment is $31,000 (cost $61,000 less accumulated depreciation $30,000). Its fair...
-
Sunny Best is the engagement partner for the financial report audit of BigMac Ltd for the year ended 31 December, 2021. The following material events or transactions have come to Sunny Bests...
-
Discuss the driving and restraining forces affecting global integration today.
-
Identify and briefly describe some of the restraining forces that impede the growth of global marketing.
-
Mechanistic and bureaucratic structures can offer big advantages. What are they?
-
In what ways is exceptional leadership an important and daunting role in global marketing?
-
Describe the differences among ethnocentric, polycentric, regiocentric, and geocentric management orientations.
-
How do proprietorships and partnerships compare when it comes to profits? Select one: a. Proprietor receives 100% of profits; partners receive 50% of profits. b. Proprietor receives 50% of profits;...
-
Difference between truncate & delete
-
Bill and Edna had been married two years and had just reached the point where they had enough savings to start investing. Bills uncle Dave told them that he had recently inherited some very rare...
-
Roland's Overhead Doors reports the following financial information: Assets ................................ $ 45,800 Liabilities ............................. 17,220 Common Stock...
-
On September 1, 2018, Salem Landscaping collected $24,000 in advance from customers for landscaping services. The service revenue will be earned monthly over the 12-month period ending August 31,...
-
Mail Plus performs mailing services on account, so virtually all cash receipts arrive in the mail. Gina Star, the owner, has just returned from a meeting with new ideas for the business. Among other...
-
Showbiz Sportswear completed the following selected transactions during 2008 and 2009: Requirements 1. Open general ledger accounts for Allowance for Uncollectible Accounts and Uncollectible-Account...
-
On February 28, Tradewinds Sailing Supplies had a \(\$ 75,000\) debit balance in Accounts Receivable and a \(\$ 2,200\) credit balance in Allowance for Uncollectible Accounts. During March,...
Study smarter with the SolutionInn App