User Account

All Pages

The company''s weighted cost of capital

Assignment Help Finance Basics
Reference no: EM13287601

Question 1 ; Hildy is a company that commenced operations many years ago. relevant details relating to the company's capital structure are extracted from its balance sheet as follows :

Components - Debentures ($100 par, 12% coupon-annual) Book Value $4,000,000

Components - Preference Shares ($3 par, 7% cumulative) Book Value $1,500,000

Components - Ordinary Shares ($1 par) Book Value $7,500,000

market yield on the debentures is 15%. Current price of debenture is $94. preference shares are trading on the market at $3.00, and a dividend of 21c per share has just been paid. forecasts in relation to market returns are as follows : expected risk-free rate of return =5%; expected return on the market porfolio = 15.0%; and the systematic risk of Hildy ordinary shares is 0.6. These shares are traded on the market at $1.2 each. Tax rate is 30%

Calculate the following : Cost of debt

Cost of preference shares

Cost of ordinary shares

The company's weighted cost of capital (WACC)

 

Reference no: EM13287601

Questions Cloud

How much will you pay for a share today : The company will pay a $10 per share dividend in 10 years and will increase the dividend by 5% year thereafter. If the required an 11% return on the company's stock, how much will you pay for a share today?
What level of sales could walter industries have obtained : Walter Industries has $4 billion in sales and $1.6 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity.
Draw the network and determine the equivalent resistance : The first parallel combination is composed of a 6 ohm resistor and a 3 ohm resistor.the second parallel combination is composed of a 12 ohm resistorand a 6 ohm resistor. Draw the network and determine its equivalent resistance.
What are your forecasts of the company year-end inventory : What are your forecasts of the company's year-end inventory turnover ratio? Round your answer to two decimal places.
The company''s weighted cost of capital : The company's weighted cost of capital (WACC)
Explain how the number of moles of the gas varies : In the simulation, set the temperature of the sample gas to 304 . Click on the "Run" button and observe how the number of moles of the gas varies with an increase in the gas's volume
Determine what are the possible values for resistance : Two resistances having values of R and 3R are inparallel. R and the equivalent resistance are both integers. What are the possible values for R
How much cash would be freed-up : By how much would pre-tax profits change? Round your answer to the nearest cent.
What is the expected growth rate in beacon dividends : For the coming year, the company is forecasting a 35% increase in sales; and it expects that its year-end operating costs, including depreciation, will equal 65% of sales.

Reviews

Write a Review

Finance Basics Questions & Answers

  What will the price be 2 years from today

Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today? Round your answer to the nearest cent.

  What is the expected growth rate in beacon dividends

For the coming year, the company is forecasting a 35% increase in sales; and it expects that its year-end operating costs, including depreciation, will equal 65% of sales.

  Find the estimated total costs for a production level

Total costs were $72,200 when 25,000 units were produced and $97,500 when 35,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.

  Differences among horizontal-vertical-conglomerate mergers

Write down the differences among horizontal, vertical, and conglomerate mergers.

  Compare and contrast the demise of the accounting firm

Compare and contrast the demise of the accounting firm of Arthur Andersen with the failures evident in the recent Subprime Financial crisis. What lessons can be learned from these failures?

  What rate of return would you earn

The stock of the Health Corporation is currently selling for $20 a share and is expected to pay a $1 dividend at the end of the year. If you bought the stock now and sold it for $23 after receiving the dividend, what rate of return would you earn?

  What are the key elements of business valuations

What are the key elements of business valuations and how would you value Walmart?

  Various macroeconomic factors to determine exchange rates

Describe the various macroeconomic factors which determine exchange rates? What is the justification for existence of International Fisher Effect?

  Explain what is the lowest fc

Explain what is the lowest FC at which firm 1 does not have to engage in strategic entry deterrence in order to keep firm 2 out of the market?

  Important information of current value per share

Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. What is the current value per share?

  At what cost of capital do the two projects have same net

Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Year Project A Cash Flow Project B Cash Flow 0 -$10,000 -$8000 1 1,000 7000 2 2,000 1000 3 6,000 1000 4 6,000 1000 At what cost of capital do th..

  Determined that various supplies had been consumed

Gaffney Company had these resulting adjusting entry situations at the end of December. Record the adjusting entries at December 31, using T-Accounts.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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