Debt-common stock and preferred stock

Assignment Help Financial Management
Reference no: EM13806719

Finding the WACC. Given the following information for Janicek Power Co., find the WACC. Assume the company’s tax rate is 35 percent.

Debt: 8,500 7.2 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 118 percent of par; the bonds make semi annual payments.

Common stock: 225,000 shares outstanding, selling for $87 per share; beta is 1.15.

Preferred stock: 15,000 shares of 4.8 percent preferred stock outstanding, currently selling for $98 per share.

Market: 7 percent market risk premium and 3.1 percent risk-free rate

Reference no: EM13806719

Questions Cloud

How much profit did the firm lose because of the hedge : Southern Fields has an inventory of 838,000 pounds of sugar. The firm placed a partial hedge on this inventory by selling 6 futures contracts at 9.56. The futures contracts are based on 112,000 pounds and quoted in cents per pound. At the time the fi..
Total revenues and net income : Total revenues and net income for 2011 for Lake Corporation is $3,500,000 and $280,000 respectively. Lake Corporation has had 400,000 common shares of stock outstanding for all of 2011. The selling price of smith lake corporation common stock on Dece..
Ebit and leverage : EBIT and Leverage. Kaelea, Inc., has no debt outstanding and a total market value of $125,000. Earnings before interest and taxes, EBIT, are projected to be $10,400 if economic conditions are normal. If there is strong expansion in the economy, then ..
Calculating cost of equity : Stock in CDB Industries has a beta of .90. The market risk premium is 7 percent, and T-bills are currently yielding 3.5 percent. CDBs most recent dividend was $1.80 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely..
Debt-common stock and preferred stock : Finding the WACC. Given the following information for Janicek Power Co., find the WACC. Assume the company’s tax rate is 35 percent. Debt: 8,500 7.2 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 118 percent of ..
Calculating cost of debt : Calculating Cost of Debt. ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 108 percent of face value. The issue makes semi annual payments and has an embed..
Calculating cost of preferred stock : Calculating Cost of Preferred Stock. Sixth Fourth Bank has an issue of preferred stock with a $6.25 stated dividend that just sold for $108 per share. What is the bank’s cost of preferred stock?
What stock price will you get a margin call : You sell short 200 shares of Doggie Treats Inc. that are currently selling at $25 per share. You post the 50% margin required on the short sale. If your broker requires a 30% maintenance margin, at what stock price will you get a margin call?
Like ordinary stocks-exchange traded funds : Treasury bond yields are commonly used as the basis for yield curves because they are low risk and homogeneous in nature. The mutual fund, and not the investor, is responsible for all income taxes on capital gains and dividends earned by the fund. Li..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Describe the liability of the partnership-fresher flowers

Fran, Joe, and Mike formed a general partnership to operate a flower shop called Fresher Flowers. One of Fran’s jobs is to make deliveries using the partnership truck. In one such delivery, Fran negligently ran a stop sign, striking a car driven by P..

  What is the market risk premium

Stock A has a beta of .8, and investors expect it to return 9%. Stock B has a beta of 1.2, and investors expect it to return 13%. Use the CAPM to find the expected rate of return and the market risk premium on the market. What is the Market Risk Prem..

  Determine present value

A basketball player has just signed a $30 million contract to play for three years. She will receive $5 million as an immediate cash bonus, $5 million at the end of the first year, $8 million at the end of the second year, and the remaining $12 milli..

  The firms cost of preferred stock financing

The preferred stock of gator industries sells for $35.86 and pays $2.72 per year in dividends. what is the cost of preferred stock financing? if gator were to issue 483,000 more preferred shares just like the ones it currently has outstanding.

  Case study new modes of trade finance trade finance in the

case study new modes of trade finance trade finance in the twenty-first century plug and pay?palate-able delights pad

  Can you help mr. jackson develop a financial plan

Can you help Mr. Jackson develop a financial plan? Do you think his growth plan is feasible? Specific calculations are not necessary, but you should describe any specific calculations one may use to assist Mr. Jackson.

  Cash flow projections are a central component to analysis

Cash flow projections are a central component to the analysis of new investment ideas. In most firms, the person responsible for making these projections is not the same person who generated the investment idea in the first place. Why?

  Stock has returns-what is the probability range

A stock has returns of 3%, 18%, -24%, and 16% for the past four years. Based on this information, what is the 95% probability range for any one given year?

  Assume that the lessee pays no taxes and the lessor

An asset costs $420,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The lessor can borrow at 4.4 percent and the lessee can borrow at 7.4 percent. The corporate tax rate is 34 percent for..

  Residual model-dividends and payouts

The capital budget forecast for the Santo Company is $800,000. The CFO wants to maintain a target capital structure of 40% debt and 60% equity, and it also wants to pay dividends of $500,000. If the company follows the residual dividend policy, how m..

  Examine the criticality of timely information

Examine strategies for decision-making based on quantitative models and examine the criticality of timely information.

  Importance of sound decision-making in risk

For the first time in a very long time, the concept of financial risk and risk management has become a topic of concern at Presidential press conferences. Such concern has centered on esoteric financial products such as derivatives that are used to m..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd