What is abc weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM132608609

Provide excel with formulations or resolution.

ABC Corp's WACC

(a) ABC Corp shares are currently trading at $69.25 each. The yield on the company's debt is 4% and the firm's beta is 0.25. The T-Bill rate is 4% and the expected return on the market (E (kM)) is 11%. The company's target capital structure is 20% debt and 80% equity. The company pays a combined income tax rate of 20%. The GST rate is 13%. What is ABC's cost of equity? Show your work and provide a statement clearly indicating your answer.

(b) Using the information outlined above, calculate ABC's cost of debt (after tax). Show your work and provide a statement clearly indicating your answer.

(c) What is ABC's weighted average cost of capital? Show your work and provide a statement clearly indicating your answer.

(d) ABC's key rival, Neil Corp has a 7 percent preferred stock outstanding that is currently selling for $48 a share. The preferred stock has a $100 par value. The market rate of return is 10 percent and the firm's tax rate is 34 percent. GST is 13%. What is Neil Corp's cost of preferred stock? Show your work and provide a statement clearly indicating your answer.

Reference no: EM132608609

Questions Cloud

Examine nuanced relationships racism vs gender politics : Social milieu, examine the nuanced relationships between racism and gender politics in Going to Meet the Man and Sometimes, a Motherless Child.
What elements of case constitute reasonable suspicion : What elements of this case constitute reasonable suspicion thus mandating a hotline call to child protective services? Be specific.
Identify the clinical issues apparent : Develop a quantitative research question related to the clinical issue selected, demonstrating your understanding of this approach to research.
Evaluate and make connections between theories and practice : Critically evaluate and make connections between the theories and practice you are engaging with in this unit and can guide you to become more aware of your
What is abc weighted average cost of capital : ABC Corp shares are currently trading at $69.25 each. The yield on the company's debt is 4% and the firm's beta is 0.25.
What nursing certifications are considering : In what professional nursing organizations do you currently participate? What organizations might you think about participating in for the future?
Identify the targeted skill : Identify the targeted skill. Summarize your strengths and areas of improvement in this skill area. Then, identify your desired outcomes around this skill area
What is existing discussion around issue : What is the contemporary or existing discussion/conversation around this "issue"? What are the multiple viewpoints of the stakeholders on it?
What safeguard does business have to ensure ethical practice : What safeguards does your business have to ensure ethical practices by its employees? Do you have any examples you'd like to share

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Roy gross is considering an investment

Roy Gross is considering an investment that pays 6.50 percent. How much will he have to invest today so that the investment

  What effect on the future value of an annuity does increasin

What effect on the future value of an annuity does increasing the interest rate have? Does a change from 4% to 6% have the same dollar impact as a change from 6% to 8%?

  What interest rate would you be paying in both par and ear

Moulton Motors is advertising the following deal on a used Honda Accord: “Monthly Payments of $245.00 for the next 48 months and this beauty can be yours!” The sticker price of the car is $9,845.00. If you bought the car, what interest rate would you..

  Calculate the dollar cost of each of the proposed plans

If the firm had made a purchase of $100,000 for which it had been given terms of 2/10 net 30, would it increase the firm's profitability to give up the discount and not borrow as recommended in part b? Why or why not?

  Diversification of portfolios

Enron employees were heavily invested in Enron stock through their 401(k) plans. While firms frequently provide a match in the form of firm stock, employees are typically free to move the money to an optional investment.

  What aspects of overconfidence are often modeled in finance

Explain how a researcher can measure the degree of miscalibration of a group of people.

  Annual cash flow probability

Annual Cash Flow Probability

  Mikkelson corporations stock had a required return of 1175

mikkelson corporations stock had a required return of 11.75 last year when the risk-free rate was 5.50 and the market

  What is the role of the trustee associated

What is the role of the trustee associated with a bond issue? Find the Internet site for a trust firm and provide the link for your classmates.

  You buy a stock for which you expect to receive an annual

you buy a stock for which you expect to receive an annual dividend of 2.10 for the fifteen years that you plan on

  Examine the relevant consumer behavior

Examine the relevant consumer behavior for your target market. Explain the main reasons why the brand name, logo, slogan, brand extension, as well as the positioning statement and marketing strategy are right for the identified target market.

  Interest-rate risk on bonds

If the portfolio you manage is holding $25 million of 6s of 2029 Treasury bonds with a price of 110, what forward contract would you enter into to hedge the interest-rate risk on these bonds over the coming year?

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