Shares of common stock outstanding with a market price
Course:- Financial Management
Reference No.:- EM13942934

Assignment Help >> Financial Management

A firm has 2,000,000 shares of common stock outstanding with a market price of $2 per share. The firm also has 2,000 bonds outstanding with a market value of $1,200 per bond. The bonds have a 10% coupon rate (semi-annual coupons) and mature in 15 years. The firm’s beta is 1.2, the T-bill rate is 5%, and the market risk premium is 7%. If the tax rate is 34%, what is the WACC?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
You have accumulated some money for your retirement. you are going to withdraw $86,264 every year at the end of the year for the next 15 years. how much money have you accumul
You decided to buy Treasury bill futures contracts with a quoted price was 96-50. When you close this position, the quoted price was 95-25. Determine the profit or loss per co
Michael's, Inc. just paid $2.75 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 5.90 percent. If
Suppose that the City of Old York is considering building a recreation center. Its estimated construction cost is $12 million, and there will be annual staffing and maintenanc
A company could sell $125 million in bonds to finance an aquisition. The annual interest rate would be 6.5% and they would mature in 15 years. Annual principal repayments of $
Currently retaining all of their earnings and does not plan to pay dividends for the next 5 years. In the 6th year they plan on paying $0.65 per share with the dividend expect
Suppose stock in Boone Corporation has a beta of .90. The market rate premium is 7 percent, and the risk-free is 8 percent. Boone's las dividend was $1.80 per share, and the d
A firm has $80 million in debt and 60% of its capital structure consists of common equity. The firm has no preferred stock. The firm’s bonds have YTM of 8.5%, and the firm is