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
You are given the following information about an economy: Gross Investment  =                                                         40 Govt. purchases of goods & service =

What impact will high and variable rates of inflation have on the economy? How will they influence the risk accompanying long-term contracts and related business decisions?

Compared with the situation before 1981, the marginal tax rates imposed on individuals and families with high incomes are now lower. What was the top marginal personal income tax r

Macroeconomic policy Macroeconomic policy trade-offs are likely along the short-run Phillips curve however are not maintainable in the long run. In the short run a government

critically explain solow model of economic growth

Kermit is considering purchasing a new computer system. The purchase price is $106,430. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compo

An attorney supplies 40 hours of work per week when her fee is $100 per hour but supplies 60 hours of work per week when her fee rises to $120 per hour. Using the midpoint formula,

Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, th

Discuss about the Keynesian economists The Keynesian economist A. W. Phillips developed short-run Phillips curve analysis in the 1950s. Phillips had researched the relationshi

how to solve problem of scarcity and choice