Estimate the wacc and cost of capital, Macroeconomics

Cowboy Corporation is estimating its WACC.  The firm's debt structure contains: (1) 30,100 long-term bonds with an 8.1% coupon, paid semiannually, a 10 years-to-maturity, and a $1000 face-value which sells for $1200; (2) 20,200 callable long-term bonds with an 4.6% coupon, paid semiannually, a 15 years-to-maturity, an 8-year call protection, an 8.1% call premium, and a $1000 face-value which sells for $850; and (3) 2000, 20-years-to-maturity, zero-coupon bonds that sell for 40% of par with a par of $25,000.  The firm also has 500,000 shares of preferred stock which sells at $120 per share, and pays a 10 percent (of $100 par) annual dividend.  Cowboy's common stock, which will be paid a dividend of $4.00 next year, sells for $80.00 per share. Common dividends are expected to grow at a rate of 7 percent per year.  Cowboy has 2,000,000 common shares outstanding.  The firm's marginal tax rate is 35 percent. 

A.   What are costs of debt, preferred stock, and equity components of capital?

B.   What is Cowboy's WACC


Posted Date: 3/21/2013 2:14:22 AM | Location : United States

Related Discussions:- Estimate the wacc and cost of capital, Assignment Help, Ask Question on Estimate the wacc and cost of capital, Get Answer, Expert's Help, Estimate the wacc and cost of capital Discussions

Write discussion on Estimate the wacc and cost of capital
Your posts are moderated
Related Questions
Because the structure of the personal income tax is progressive, a larger share of income is taxed at higher rates as real income increases. Therefore, economic growth automaticall

Explain what convex indifference curves means in terms of marginal utility. What properties must a utility function have in order to obtain convex indifference curves?

Three defective electric tooth brushes were shipped to a drug store by Clean Brush Products along with 17 non defective ones. A) What is the probability the first two electric t

1) Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b)There are 13 possible pairs possible (Ac

1.  What is law of diminishing marginal utility? 2.  Find out the marginal utility for the following schedule of consuming pizza Pizza consumed 0

What impact will an unanticipated increase in the money supply have on the real interest rate, real output, and employment in the short run? How will expansionary monetary policy a

What do you mean by Gross Domestic Product? Gross Domestic Product: GDP stands for Gross domestic product, measures the value of all concluding goods and services produce

Suppose that a paper mill "feeds " a downstream box mill. For the downstream mill, the marginal profitability of producing boxes declines with volume. For example, the first unit o

Problem >> Explore the relationship between Artificial intelligence and Neural networks. The systems which use this type of intelligence are known as artificial intelligent

how can a country maintain equilibrium GDP with foreign trade?