What will the WACCs be for each division

Assignment Help Financial Management
Reference no: EM13928258

Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.9, 1.3, 1.4, and 1.5, respectively. Assume all current and future projects will be financed with 20 percent debt and 80 percent equity, the current cost of equity (based on an average firm beta of 1.3 and a current risk-free rate of 3 percent) is 11 percent and the after-tax yield on the company’s bonds is 8 percent.

What will the WACCs be for each division? (Do not round intermediate calculations and round your final answers to 2 decimal places.)

                WACCs

Division A            %

Division B             %

Division C             %

Division D            %

Reference no: EM13928258

Questions Cloud

Calculate the net investment required to acquire the new saw : Seco Dame Enterprises (SDE) acquired a robotic saw six years ago at a cost of $10 million. Calculate the net investment required to acquire the new saw.
What is the payback period of the project : Your required rate of return is 8%. If you invest $15,000 today in a project, you will receive the following cash flows: What is the NPV of the project? What is the payback period of the project?
Project with the following projected cash flows : Thompson Industries has a project with the following projected cash flows:
How are emotions linked to memories : Video: https://www.youtube.com/playlist?list=PL35B9B52BF0F4238D. How are emotions linked to memories? Provide some examples to support your answers
What will the WACCs be for each division : Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.9, 1.3, 1.4, and 1.5, respectively. What will the WACCs be for each div..
Playing card with a face value and a suit : The Card structure below represents a playing card with a face value and a suit. Using the main code given, set the cards in the deck array to be one of each kind of playing card.
Calculate net present value of proposed expansion project : Based on its analysis of current conditions in Swiss capital markets, International Foods has determined that the applicable cost of capital for the project is 16 percent. Calculate the net present value of the proposed expansion project.
Forecast for the firm is steady growth over the next decade : You are considering buying shares of stock in the Steel Mill. The forecast for the firm is steady growth over the next decade. The firm just paid its annual dividend of $1.42 per share and has plans to increase that amount by 4 percent annually indef..
Summary of situational analysis : As an existing business Tidmax is a huge international wholesale warehouse that provides it members with quality big box products and low prices.

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the average monthly cost of servicing

Determine the average monthly cost of servicing the typical student's demand deposit account, which generates 27 withdrawals (15 electronic), two transit checks deposited, two transit checks cashed, two deposits (one electronic), and one on us check ..

  What was the rate of inflation

The April 21, 2015 University Press reported that faculty salaries rose an average of 3.1% in the past year, but after adjusting for inflation, there was actually an average decrease of 0.3%. What was the rate of inflation?

  Retirement plan by considering two investment plans

Assume that you are setting up your retirement plan by considering two investment plans together. (Your retirement in 30 years). You want to earn a total of $1,000,000 after 30 years from the following two investment plans together. You currently hav..

  Explain inappropriate tool for looking at market risk

This will take a little research on the Internet. Why may the bell curve be an inappropriate tool for looking at market risk? Find out what Mandelbrot (The Mis Behvior of Markets) and Taleb (The Black Swan) have to say.

  Part - 1at year-end 2012 total assets for ambrose inc were

part - 1at year-end 2012 total assets for ambrose inc. were 1.2 million and accounts payable were 375000. sales which

  Expected return on equity of otherwise identical equity firm

Locomotive Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt–equity ratio is expected to rise from 30 percent to 50 percent. The firm currently has $3.3 million worth of debt outsta..

  What were the total cash expenses-what was clinics cash flow

Great Lakes Clinic reported net income for 2014 of $3.6 million on total revenues of $55 million. Depreciation expenses totaled $3 million. What were the total expenses? What were the total cash expenses? What was the clinic's cash flow?

  Dividends are anticipated to maintain growth rate

The next dividend payment by Halestorm, Inc., will be $1.76 per share. The dividends are anticipated to maintain a growth rate of 7 percent forever. If the stock currently sells for $34 per share, what is the required return?

  Observe a spot exchange rate

Suppose you observe a spot exchange rate of $2.00/£. If interest rates are 5% APR in the U.S. and 2% APR in the U.K., what is the no-arbitrage 1-year forward rate?

  Logic for a price increase from starbucks perspective

Starbucks in 2004 announced that it will increase prices at its stores before the end of year. Analysts expect prices to rise by 4% to 5%. Prices are going up to adjust for increases in dairy products and rents. The firm is seen as the clear leader i..

  Face value bonds-what is the yield to maturity

The $1,000 face value bonds of Jasper International have a 7.5 percent coupon and pay interest annually. Currently, the bonds are quoted at 98.27 and mature in 3.5 years. What is the yield to maturity?

  Corresponding percent mark up based on the sale price

The percent mark up on a video game is known to be 108% based on cost. If the seller said $35 for one, then what would be the corresponding percent mark up based on the sale price?

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