Determine the companys wacc by computing

Assignment Help Financial Management

Reference no: EM13923806

Merrill Lynch Limited has the following information and a tax rate of 30 percent. . Debt 2,000, 6 percent coupon bonds outstanding, $1,000 par value, 12 years to maturity, selling for 95 percent of par, the bonds make semiannual payments Common stock 250,000 shares outstanding, selling for $55 per share; the beta is 1.20 Preferred stock 12,000 shares of 6 percent preferred stock outstanding, currently selling for $110 per share Market 6 percent market risk premium and 4 percent risk-free rate Determine the company’s WACC by computing the following:

1. Total market value for the company

2. After-tax Cost of Debt (rounded to 3 decimal places)

3. Cost of Common Stock (rounded to 3 decimal places)

4. Cost of Preferred Stock (rounded to 3 decimal places)

5. WACC (rounded to 3 decimal places)

SHOW ALL WORKINGS

Reference no: EM13923806

Questions Cloud

Financial accounting standards board : Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the

What is the aftertax cash flow from the sale of this asset : Consider an asset that costs $974,000 and is depreciated straight-line to zero over its ten-year tax life. The asset is to be used in a seven-year project; at the end of the project, the asset can be sold for $136,000. If the relevant tax rate is 30 ..

Reality meets the theoretical : Select a juvenile of your choice or one that we have already studied (such as Greg Ousley, Colt Lundy, or Paul Gingerich from the video in Week One, "Young Kids, Hard Time") and conduct a search for additional information on their case, their tria..

Disaster-recovery planning for technical communicators : "Managing in a Post-9/11, Post Katrina World: An Introduction to a Disaster-recovery Planning for Technical Communicators", How the attacks of September 11, 2001 affected Barclay's Capital and Putman Investments

Determine the companys wacc by computing : Merrill Lynch Limited has the following information and a tax rate of 30 percent. . Debt 2,000, 6 percent coupon bonds outstanding, $1,000 par value, 12 years to maturity, selling for 95 percent of par, the bonds make semiannual payments Common stock..

How do you intend to make an impact at a university : Briefly describe a situation in which you felt that you or others were treated unfairly or were not given an opportunity you felt you deserved. Why do you think this happened? How did you respond? Did the situation improve as a result of your resp..

Determine you agree or disagree with kennedys statements : Determine whether you agree or disagree with each of Kennedy's statements. Justify your response with one reason for each statement.

Equilibrium price and quantity for wheat : Question 1 In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibri..

What are the net cash flows of the project for the years : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. What are the net cash flows of th..

User Account

All Pages