User Account

All Pages

Calculate the wacc

Assignment Help Finance Basics
Reference no: EM132491569

a. A firm has bonds with 10 years to maturity, and a coupon rate of 8% (paid semi-annually). The bond currently sells for $932. The firm has a beta of 1.2. The stock price is $20/share. 3-month treasury bills yield 5%. The firm has outstanding, $10 million in debt at face value and 1 million shares of common stock outstanding. Assume that the market risk premium is 5% and the tax rate is 35%. Calculate the WACC.

b. Now assume that the company issues another $2 million in face value debt. What happens to the WACC? Why?

Please provide an explanation.

Reference no: EM132491569

Questions Cloud

What is the current bond price : The bonds make semiannual payments and have a par value of $1,000. if the ytm on these bonds is 11 percent, what is the current bond price?
Analysis of the characteristics of each fund : Analysis of the characteristics of each fund. Recommendation of the type of investor to which each fund is suited. Identify one mutual fund from that family
Find sales volume at breakeven and prepare income statement : Find sales volume at breakeven and prepare income statement at breakeven. Based on the data identify fixed costs, unit variable costs, and unit price
Free cash flows of the? project-arnold inc : What are the free cash flows of the? project? If the cost of capital is 15%?, what is the NPV of the? project?
Calculate the wacc : Now assume that the company issues another $2 million in face value debt. What happens to the WACC? Why?
Determine variable costing analysis with an example : Determine Variable costing analysis with an example. Describe what you learned about this topic and how variable costing differs from absorption costing.
Stocks from the most risky to the least risky : Rank these stocks from the most risky to the least risky.
Would voluntarily disclose the study information : If you were a manufacturer of one of the drugs, would you voluntarily disclose the study information? Why or why not? Stanford University medical researchers
Data Communications Assignment : Data Communications Assignment - What type of device could be used to connect the multiple signals from both voice and data

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd