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Ten Pins Manufacturing has 8.5 million shares of common stock outstanding. The current share price is $55, and the book value per share is $3. The company also has two bond issues outstanding. The first bond issue has a face value of $70.4 million and a coupon rate of 7.2 percent and sells for 108.1 percent of par. The second issue has a face value of $60.4 million and a coupon rate of 7.7 percent and sells for 109.3 percent of par. The first issue matures in 7 years, the second in 28 years. The company’s stock has a beta of 1.1. The risk-free rate is 3.3 percent, and the market risk premium is 7.2 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 34 percent. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You take a short position in 100 European call option contracts, with strike price $50 and maturity three months, on a stock that is trading at $52. The annual volatility of the stock is constant and equal to 22%. The annual, continuous risk-free int..
The city of Detroit is deciding whether or not to build an aquarium. Officials believe that a world-class stingray exhibit will attract families from across Michigan to visit the city. In turn, this will spur local businesses, lead to economic growth..
Ellie just learned that when she turns 50 she will inherit $1,000,000 from a long lost Aunt. According to her Aunt’s will, the money will be placed in a safety deposit box which she cannot open until she is 50. Ellie is currently 20 years old. What w..
You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $130 initially, and then $175 per year in maintenance costs. Either machine must be replaced at the end of its life wit..
At the beginning of the year, a firm has current assets of $330 and current liabilities of $234. At the end of the year, the current assets are $497 and the current liabilities are $274. What is the change in net working capital?
SIROM Scientific Solutions has $10 million of outstanding equity and $5 million of bank debt. The bank debt costs 5% per year. The estimated equity beta is 2. If the market risk premium is 9% and the risk-free rate is 3%, compute the weighted average..
Interpreting Bond Yields: Is the yield to maturity on a bond the same thing as the required return? Is YTM the same thing as the coupon rate? Suppose today a 10 percent coupon bond sells at par. Two years from now, the required return on the same bon..
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Flemish, one of the two official languages of Belgium, belongs to which of Europe's major language families?
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