Treasury securities are yielding

Assignment Help Financial Management
Reference no: EM131077857

ABC Company has an after-tax cost of debt of 6 percent, beta of .85, tax rate of   35 percent, and a target capital structure of 60 percent equity and 40 percent debt.  Ten year Treasury securities are yielding 4 percent and the risk premium for ABC is 5.1 percent.  What is ABC’s WACC?

Reference no: EM131077857

Questions Cloud

Market value weights assets liability and equity cash : WACC The Patrick's Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debit is 13%, and it marginal tax rate is 40%. Assume that the firms long term debt sells at par value. Calculate Patrick's W..
Find the amount necessary to pay the invoice in full : Cody's Book Nook received an invoice dated July 27 for $1283 with terms of 4/5 EOM. If the invoice is paid on August 3, find the amount necessary to pay the invoice in full.
What is the cost of external common equity : What is the cost of external common equity?
What is the aftertax cost of the zero coupon bond : Jiminy's Cricket Farm issued a 30-year, 7.4 percent semiannual bond 8 years ago. The bond currently sells for 91 percent of its face value. The book value of this debt issue is $96 million. What is the aftertax cost of debt?  What is the aftertax cos..
Treasury securities are yielding : ABC Company has an after-tax cost of debt of 6 percent, beta of .85, tax rate of   35 percent, and a target capital structure of 60 percent equity and 40 percent debt.  Ten year Treasury securities are yielding 4 percent and the risk premium for ABC ..
Payments by check can easily be controlled : Payments by check can easily be controlled if ________________.
What is the firm after tax cost of debt : 1,000 par value bond matures in 6 years, interest at 8%, 1150.00 market value, tax rate at 30%, and marginal tax rate at 36%. What is the firm after tax cost of debt?
Living will rule : What happened in 2008 is the "living will" rule in the Dodd Frank documents is trying to fix or correct? Please be elaborate and provide the best example in great detail.
Deposit the money into an account : Jackson & Parnell receive $8873 every six months from a grant. The amount they receive decreases each period by $157. Jackson & Parnell deposit the money into an account paying 5% per year, compounded biannually. How much will they have in the accoun..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected to generate aftertax cash flows

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt−equity ratio of .75. It’s considering building a new $54 million manufacturing facility. This new plant is expected to generate afte..

  What is the firms cost of preferred stock

What sources of capital should be included when you estimate XYZ's WACC? and Should the component costs be estimated on a before or after-tax basis? Why?

  Bonds yield to maturity remains at its current rate

A 20-year bond with a par value of $1,000 has a 9 percent annual coupon. The bond currently sells for $925. If the bond’s yield to maturity remains at its current rate, what will be the price of the bond 10 years from now?

  Contrast the internal rate of return

Compare and contrast the Internal Rate of Return (IRR), the Net Present Value (NPV) and Payback approaches to capital rationing. Which do you think is better? Why? Provide examples and evidence from two articles from ProQuest to support your position..

  Increase at same rate sales-self-supporting growth rate

Maggie's Muffins, Inc., generated $4,000,000 in sales during 2013, and its year-end total assets were $2,400,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  Assume the face value of the treasury bill

Suppose investors can earn a return of 2% per 6 months on a Treasury note with 6 months remaining until maturity. What price would you expect a 6-month maturity Treasury bill to sell for?

  What are the components of a financial planning model

What two horizons must companies plan for? How long is the short-term? What do the long-term financial planning focus on? Who proposes the capital expenditures and who does the strategic planning? What are three reasons financial plans are done? What..

  What price would bonds sell for assuming investors expect

What price would the bonds sell for assuming investors do not expect them to be called? What price would the bonds sell for assuming investors expect them to be called at the end of 10 years?

  What is the firms net income after four years

Manufic has announced this year's net income as $832,500. It expects its net earnings to grow at a rate of 15 percent per year for the next two years, before dropping to 12 percent for each of the following two years. What is the firm's net income af..

  Coupon bond with seven years to maturity

What is the Macaulay duration of a 6.6 percent coupon bond with seven years to maturity and a current price of $1,069.40? What is the modified duration?

  What are some long-term options of financing

What are some long-term options of financing? How can leverage affect the value of the firm? What is homemade leverage?

  Using the corporate tax rates find the marginal tax rate

Using the corporate tax rates find the marginal tax rate for the following levels of corporate earnings: 13,100; 60,600; 88,200; 204,000; 402,000; 1.6 million and 19.8 million.

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