Equity beta and market value of equity

Assignment Help Financial Management

Reference no: EM13809760

XYZ Corp. has equity beta 1.8 and market value of equity $230 million. The required return on XYZ’s debt is 7.8%. The market value of that debt is $250 million and the book value is $240 million. The risk-free rate is 6% and the expected return on the market is 9.9%; the tax rate of this company is 40%. What is XYZ’s WACC?

Reference no: EM13809760

Questions Cloud

Capital asset pricing model holds : Stock A's beta is 1.4 and Stock B's beta is 1.5. If we assume that the Capital Asset Pricing Model holds:

What is the amount of his monthly end-of-month payments : A man plans to work for 25 years and to make deposits into a retirement fund at the amount of 100 at the end of year month. The fund earns 6% nominal, converted monthly. The fund will be used to purchase a 20- year annuity-certain in retirement. Assu..

Name of financial tool-competitor profiling : Name of financial tool: Competitor profiling

Price of old bonds in open market-valuation procedures : The interest rate on a2 rated bonds was now 6%. $30million 15yr bond issue is outstanding and was initially issued at 9% 5yrs ago. Barton is considering refunding the bond issue. compute price of old bonds in open market, using the valuation procedur..

Equity beta and market value of equity : XYZ Corp. has equity beta 1.8 and market value of equity $230 million. The required return on XYZ’s debt is 7.8%. The market value of that debt is $250 million and the book value is $240 million. The risk-free rate is 6% and the expected return on th..

Find the assessed value of a home with a market value : Find the assessed value of a home with a market value of $175,000 if the assessed valuation is 35% of the market price. Find the property tax on a home with an assessed value of $85,000 if the property tax rate is $11.25 per $1,000 of the assessed va..

What is the taxable gain on the disposal of the equipment : An oil refinery has decided to purchase some new drilling equipment for $140,000. The equipment will be kept for 10 years before being sold. The estimated MV at the end of 10 years is $11,000. If MACRS depreciation is used, under GDS guidelines, what..

What are the projects annul operation cash inflows : Nuff Folding Box Company, Inc. is considering purchasing a new gluing machine. The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. What is the tax effect ..

Analyze two mutually exclusive projects-payback criterion : Your task is to analyze two mutually exclusive projects: Using the payback criterion, explain which investment should you chose? Using the discounted payback criterion, explain which investment should you chose? Using the NPV criterion, explain which..

User Account

All Pages