Five million shares issued with a current market price

Assignment Help Financial Management
Reference no: EM13907112

RON Ltd has the following capital structure components:

Five million shares issued with a current market price of 11. Equity holders require a 8% return.

$10 million face value of corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.

 

If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC). Enter your answer in decimal form to FOUR decimal places. For example 10.34%, would be entered as 0.1034

Reference no: EM13907112

Questions Cloud

An important source of temporary cash is trade credit : Community Hospital has annual net patient revenues of $150 million. At the present time, payments received by the hospital are not deposited for six days on average. An important source of temporary cash is trade credit, which does not actually bring..
What kind of promise did john make : John sits in class next to Martin. John tells Martin that when he sees him in class on Monday he will give him a hundred dollars. What kind of promise did John make
Relationship between corporations common stockholders : Describe the relationship between a corporation’s common stockholders its board of directors, and its chief executive officer(CEO)
The candle shoppe reports the following sales forecast : Prepare a schedule of cash receipts for September.
Five million shares issued with a current market price : Five million shares issued with a current market price of 11. Equity holders require a 8% return. $10 million face value of corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.
Find a player who can increase her payoff in some subgame : Show that the strategy pair is not a subgame perfect equilibrium: find a player who can increase her payoff in some subgame. How much can the deviant increase its payoff?
What is the net present value of the refinance decision : She currently owes $131,600 on an original $136,193 15-year FRM loan that she originated 2years ago at 4.375%. Unlike earlier assignments, you are responsible to use your ownknowledge of Excel to build spreadsheets to answer each of the questions lis..
How does this relate to keynesian economics : What is Country A's GDP, What is the composition of GDP by percentage, What is the GDP per capita and How does this relate to Keynesian economics?
Find the subgame perfect equilibrium outcomes : Specify each game precisely and find its subgame perfect equilibrium outcomes. Study the degree to which the governing coalition is cohesive (i.e. all its members vote in the same way).

Reviews

Write a Review

Financial Management Questions & Answers

  Considering expanding its wine-making operations

Lakeside Grapes is considering expanding its wine-making operations. They would need new equipment that costs $390,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated salvage val..

  What is the effective annual interest rate

You have two options of paying for your new dishwasher, you can either make a single payment of $400 today, or you can pay $70 for the next 6 months, with the first payment made today. what is the effective annual interest rate (EAIR) of the second o..

  The flexible benefits account

Rosa’s employer has instituted a flexible benefits program. Rosa will use the plan to pay for her daughter’s dental expenses and other medical expenses that are not covered by health insurance. Rosa is in the 28% marginal tax bracket and estimates th..

  Weighted-average cost of capital at new capital structure

Whispering Pines, Inc. is all-equity-financed. The expected rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Calculate the company’s weighted-average cost of capital at th..

  Use as the annual sales figure when evaluating this project

Winnebagel Corp. currently sells 25,000 motor homes per year at $63,000 each, and 9,500 luxury motor coaches per year at $100,000 each. The company wants to introduce a new portable camper to fill out its product line; What is the amount to use as th..

  Retirement-assuming annual compounding

Suppose you can save $10,000 every year for 30 years until your retirement. What interest rate do you have to earn (assuming annual compounding) to have $500,000 when you retire?

  What is the present value of this stock at a discount rate

Bittles, Inc. just paid an annual dividend of $2.50 a share. The dividend will increase by 40 percent for the next two years and then increase by 4 percent annually thereafter. What is the present value of this stock at a discount rate of 6 percent?

  What will be the conversion factor

If you find a deliverable bond with a: a 6% coupon rate, what will be the conversion factor?

  Describe the basic features of open credit lines

Describe the basic features of the following:a. Open credit lines b. Asset based loans c. Term commercial loans d. Short term real estate loans

  Write a 350- to 700-word rebuttal to the article using

locate an article about a controversial subject where the author makesnbspan argument you do not agree with.nbspwrite a

  Balance method to depreciate property-plant and equipment

Assume Mallard uses the 125% declining balance method to depreciate property, plant and equipment. On June 30, 2012, Mallard purchased equipment in exchange for a $40,000 note payable due 6/30/15. The equipments had an estimated life of 8 years and s..

  What must the risk-free rate be

A stock has an expected return of 14 percent, a beta of 1.70, and the expected return on the market is 10 percent. What must the risk-free rate be? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

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!

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