Finding the wacc

Assignment Help Finance Basics
Reference no: EM1343750

1. (Answer using Excel) Finding the WACC: Given the following information for Huntington Power Co., find the WACC. Assume the company's tax rate is 35 percent.

Debt: 5,000 6 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 105 percent of par: the bonds make semiannual payments.

Common Stock: 175,000 shares outstanding, selling for $58 per share; the beta is 1.10.

Market: 7 percent market risk premium and 5 percent risk-free.
a. Find the WACC.

2. (Answer using Excel) Finding the WACC: Titan Mining Corporation has 9.3 million shares of common stock outstanding and 260,000 6.8 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.20, and the bonds have 20 years to maturity and sell for 104 percent of par. The market risk premium is 7 percent, T-bills are yielding 3.5 percent and Titan Mining's tax rate is 35 percent.

a. What is the firm's market value capital structure?
b. If Titan Mining is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows?

 

Reference no: EM1343750

Previous Q& A

  Acquisition response-behavior and board characteristics

Please offer me some ideas on article below, paying particular attention to the methodology described, if there's any gap and also the main findings that may occur. Thank you.

  How marketplace for organic apples is perfectly competitive

If the marketplace for organic apples is perfectly competitive which of the subsequent statements is inconsistent with the statement above.

  Multiple choice question based on finance

The financial managers of a company have options when it comes to the capital structure of the company. The usual components include short term debt, preferred stock,  long term debt, & common stock.

  Cross-border acquisition abandonment

Please critique this article by identifying methodology, gap and key findings. Cross-border acquisition abandonment and completion: The effect of institutional differences and organizational learning in the international business service industry

  How does the government of canada redistribute income

Illustrate what is the distinction between marginal revenue product also marginal revenue. How does the government of Canada redistribute income.

  Analysis of eads group-article analysis

Please critique the following article:In your critique, please include and identification of methodology, as well as the gap and key findings.

  Discuss illustrate what will take place to the demand curve

Discuss illustrate what will take place to the demand curve for economic text book in response to a reduction in student grants.

  Calculate par value of each share

In 2008, Pfizer had 12,000 million shares of common stock authorized, 8,863 million in issue, and 6,746 million outstanding [Round to the nearest million]. Its equity account was as follows;

  Which swimmer should be assigned to every of the four stroke

The coach wishes to Conclude how to assign four swimmers to the four different strokes to minimize the sum of the corresponding best times.

  Organizational identification merger

Please critique the following article with  the literature review, methodology and state key findings.

Reviews

Write a Review

 

Similar Q& A

  Computing the interest and future value for the given data

Computing the interest and future value for the given data

  Application: developing a budget

Application: Developing a Budget, Review the information in this week's Learning Resources (including the Media) dealing with both volume budgets and staffing and supply budgets, what is included in each, and how they vary from each other.

  Evaluating changes in capital structure

Ozone Depletion, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 30 percent debt. Using your answers to part (c), explain why Ozone's choice of capital structure is irr..

  Calculation of computation of projected cash

Calculation of Computation of projected Cash and How does this information affect your recommendation

  Explain what is the difference in current market prices

Explain what is the difference in current market prices of the two bonds and the Burger King bond has an annual coupon rate of 8 percent and matures 20 years from today

  Computation of irr as well as net present value

Computation of IRR as well as net present value and Look at the graph you draw and write a short paragraph stating what the graph

  Computing investment to completely fund annuity in 50 years

How much would you have to invest yearly to completely fund annuity in 50 years, again suppose a 6% monthly compounding rate?

  Equivalent annual cost of one of these machines

The machines have a 6-yr life after which they are worthless. Illustrate what is the equivalent annual cost of one of these machines if the required return is 16 percent.

  Find the sheepskin''s 2006 net income

Accounting accrual concept and revenue recognition - Multiple Choice and What is Sheepskin's 2006 net income using cash basis accounting?

  Explain venture capital calculations

Explain Venture capital calculations and you consider opening a business that allows them to let off steam and get rid of their aggression

  Current state of the us economy

Develop a presentation (9-12 slides) for the Board which examines the current state of the U.S. economy. Focus on four key economic metrics: Gross Domestic Product (GDP), unemployment, inflation, and interest rates.

  Specialization or research interest

Describe the specialization or research interest you desire to pursue if accepted. What are your personal and professional goals?

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