Evaluate the equipment purchase

Reference no: EM13276189

As a member of the finance department of Ranch Manufacturing your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equpiment for the plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm's capital structure as follows. To finance the purchase, Ranch Manufacturing will sell 10 year bonds paying 7.3% per year at the market price of $1,036. Preferred stock paying a $2.05 dividend can be sold for $24.09. Common stock for Ranch Manufacturing is currently selling for $ 55.42 per share and the firm paid $ 2.94 dividend last year. Dividends are expected to continue growing at a rate of 4.9% per year into the indefinite future. If the firm's tax rate is 30%, what discount rate should you use to evaluate the equipment purchase. Ranch Manufacturing's WACC is.

Reference no: EM13276189

Questions Cloud

Find the mean and standard deviation of these thickness : An assembly-line machine turns out washers with the following thickness (in millimeters): 1.20 1.01 1.25 2.20 2.58 2.19 1.29 1.15 2.05 1.46 1.90 2.03 2.13 1.86 1.65 2.27 1.64 2.19 2.25 2.08 1.96 1.83 1.17 2.24 Find the mean and standard deviation ..

Calculate the resulting torque for the electron-alpha system : (a) Calculate the radius of the orbit that would be perfectly circular under the Coulomb force. (b) Treat the electron as a current loop. Calculate the resulting torque when the electron-alpha system is placed in a magnetic field of 0.500 T direct..

Find the ebit indifference level associated : Find the EBIT indifference level associated with the two financing plans. The EBIT indifference level associated with the twp financing plans is $

Define how many grams of co2 could be produced : A reaction vessel contains 13.9g of CO and 13.9g of O2. How many grams of CO2 could be produced according to the following reaction. 2CO + O2 ---> 2CO2

Evaluate the equipment purchase : Dividends are expected to continue growing at a rate of 4.9% per year into the indefinite future. If the firm's tax rate is 30%, what discount rate should you use to evaluate the equipment purchase. Ranch Manufacturing's WACC is.

Determine transfer function and realize using ckt topology : A filter has the following design specifications: Cutoff frequency 1500 Hz Second-order Butterworth highpass filterSallen-Key circuit topology Determine the transfer function and realize it using the Sallen-Key circuit topology

Define what is jowers cost of capital : If the cost of common equity for the firm is 20.5% , the cost of preferred stock is 11.8% and the before tax cost of debt is 10.1% what is Jowers cost of capital? The firm's tax rate is 34%.

Define benzene vapor pressure : A solution of 75.0 g of benzene (C6H6) and 75.0 g of toluene (C7H8) has a total vapor pressure of 80.9 mmHg at 303 K. Another solution of 100.0 g benzene and 50.0 g toluene has a total vapor pressure of 93.9 mmHg at this temperature.

Find all values of ckt elements lowpass butterworth filter : Determine the transfer function of the second-order (2 poles) lowpass Butterworth filter with a 3-dB cutoff frequency of 5 kHz. Design it using the Sallen-Key lowpass filter configuration, find all the values of the circuit elements

User Account

All Pages