Computation of the weighted average cost of capital

Reference no: EM1314247

Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 % coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Jake's weighted average cost of capital?

Reference no: EM1314247

Questions Cloud

Cost allocation theory through cost drivers : Cost allocation theory through cost drivers - Why do they allocate costs anyway in a government (City Government) setting -- aren't cost allocation methods mostly for manufacturing companies?

Computation of cost of equity with use of capm : Computation of cost of equity with use of CAPM and Assuming the CAPM or one-factor model holds

Calculation of material handling costs : Calculation of Material handling costs, predetermined overhead costs and account balance and find the cost recorded in the inventory account after this event

Hypothesis test-analysis of variance : To test whether or not there is a difference between treatments A, B, and C, a sample of 12 observations has been randomly assigned to the 3 treatments. You are given the results below.

Computation of the weighted average cost of capital : Computation of the weighted average cost of capital and Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share

Hypothesis test for analysis of variance : The critical F value with 6 numerator and 60 denominator degrees of freedom at α = .05 is:

Preparation of bad debt account : Preparation of Bad debt Account and their Adjustment - What's the total f account in bad debts expense and What's the amount of the adjuster

Calculating the compound interest formula : Calculating the compound interest formula.

Objective type questions on capital budgeting : Objective type questions on capital budgeting and describe Chee Company has gathered the following data on a proposed investment project

User Account

All Pages