Calculate the weighted average cost of capital of company

Assignment Help Finance Basics

Reference no: EM131956557

Question: The common stock of ABC Inc. closed yesterday at $30 per share while it's preferred stock closed at $40. It has 3,000,000 common and 1,000,000 preferred shares outstanding. ABC has a beta of .8 and pays $.50 in preferred dividends quarterly. ABC also has 10,000 30-year bonds outstanding with a 6% coupon that were issued in July, 2002, now trading at 93% of face value. ABC pays an income tax rate of 34%. Assume the market risk premium is 7.4% and the current T-Bill rate is .03%. Calculate the weighted average cost of capital for ABC.

Reference no: EM131956557

Questions Cloud

Description of the topic assigned to-facebook privacy issues : A one-page description of the topic assigned to-Facebook Privacy issues

What are the common preparation mistakes sellers make : What are the common preparation mistakes sellers make in preparing to sell their company? Which one of those mistakes is most likely to be fatal?

Evaluate the market rate of return on the stock : The common stock of Auto Deliveries sells for $25.96 a share. The stock is expected to pay $2.10 per share next month when the annual dividend is distributed.

Write all acceptance criteria for these two stories : Develop a project journal. Use a table with columns with number, date, activity, explanation and status - This is the diary of your project

Calculate the weighted average cost of capital of company : The common stock of ABC Inc. closed yesterday at $30 per share while it's preferred stock closed at $40. It has 3,000,000 common and 1,000,000 preferred shares.

Describe the nature and issues involved in the event : Describe the nature, type and issues involved of/in this event, including any legal, liability or insurance issues from both your perspective.

Finding the flotation cost as a percentage of funds raised : What was the flotation cost as a percentage of funds raised? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal).

Examining how much will your collection be worth : Your coin collection contains 59 1952 silver dollars. If your grandparents purchased them for their face value when they were new.

Effective medical benefits while also controlling cost : How do you provide effective medical benefits while also controlling the cost?

User Account

All Pages