What is the weighted average cost of capital

Reference no: EM13284389

A firm has issued long-term bonds with a total market value of $50 million, and these bonds currently earn an expected return (rd) of 9 percent. Additionally, the company has 4 million shares of common stock outstanding, with each share trading for $10 (P0 = $10). At this price per share the stocks offer an expected return of 17 percent. What is the weighted average cost of capital (WACC) for this company? Assume that the firm pays no taxes (so that t = 0). Please show your work.

Reference no: EM13284389

Questions Cloud

Deduce equation of total transference for a feedback system : Deduce the equation of the total transference for a feedback system with an operator of gain a, and a feedback network of transfer β.

Explain crystallizes in a face-centered cubic structure : Silver metal crystallizes in a face-centered cubic structure. The radius of the silver atom is 144.5 pm. Calculate the density of the metal in g/cm3.

Design the electronic processor that must be connected : The converter canreceive signals from 0 V to 5.0V. Design the electronic processorthat must be connected between the sensor´s output and thecomputer´s converter A/D input; so that maximum sensibility is obtained. Justify each single proposal you m..

Explain what is the chlorine concentration : Determine all concentrations after 15 minutes. What is the chlorine concentration. What is Q after 15 minutes?

What is the weighted average cost of capital : A firm has issued long-term bonds with a total market value of $50 million, and these bonds currently earn an expected return (rd) of 9 percent. Additionally, the company has 4 million shares of common stock outstanding, with each share trading fo..

Show that the flow table can be reduced to four rows : The traffic light changes from green (logic 0) to red (logic 1) when thebeginning of the train is 1 mile from the junction. The light changes back to green when the end of the train is 1 mile away fromthe junction. Assume that the length of the tr..

Calculate the present value of the depreciation tax shield : Calculate the present value of the depreciation tax shield for an asset in the 3-year class life costing $100,000. Three-year class percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively for years 1 through 4.

Compute the wavelength of light required to remove : Calculate the wavelength of light required to remove an electron from a ground state hydrogen atom.

List the names of the active filters by the voltage gain : List the characteristics of an ideal op-amp. An amplifier has cutoff frequencies fc1 =1.2 kHz and fc2 = 16.4 kHz. Calculate the Bandwidth. List the names of the active filters by their voltagegain(dB) vs frequency graphs.

User Account

All Pages