Weight used for equity in the computation of Sports WACC

Assignment Help Financial Management
Reference no: EM13941921

Sports Corp has 10.3 million shares of common stock outstanding, 5.3 million shares of preferred stock outstanding, and 1.3 million bonds. If the common shares are selling for $25.3 per share, the preferred share are selling for $12.8 per share, and the bonds are selling for 96.97 percent of par, what would be the weight used for equity in the computation of Sports's WACC?

Which of the following is correct?

a.) 60.95%

b.) 16.40%

c.) 33.33%

d.) 19.62%

Reference no: EM13941921

Questions Cloud

Interests on corporate debts are tax-deductible : All firms can issue debts if their asset values are sufficient enough. In particular, the values of the firms will always increase as they raise more debts since interests on corporate debts are tax-deductible. One of the drawback of Net Present Valu..
Discuss the reasons behind the new expansionism : Discuss the reasons behind the new expansionism that characterized US foreign policy in the 1890s?
What is the underwriters spread per share on the issue : Calculating Costs of Issuing Stock Paige's Purses, Inc. needs to raise $25.20 million to finance plant expansion. In discussions with its investment bank, Paige's learns that the bankers recommend an offer price (or gross proceeds) of $52 per share a..
What is the possible dividend per share for common stock : Company Wii gives you the following information for its operation. The expected income available for dividends is $42 million next year before the firm has any debts. Suppose there is a 25% corporate income tax imposed on the company. What is the pos..
Weight used for equity in the computation of Sports WACC : Sports Corp has 10.3 million shares of common stock outstanding, 5.3 million shares of preferred stock outstanding, and 1.3 million bonds. If the common shares are selling for $25.3 per share, the preferred share are selling for $12.8 per share, and ..
China has been managing its exchange rate : Has the range been similar to the change in exchange rate in say the dollar vs. the euro over the same ten years? Do you think China has been managing its exchange rate?
What will be the after-tax cash flow of this sale : Suppose you sell a fixed asset for $111,000 when it's book value is $127,000. If your company's marginal tax rate is 35%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
Expected return on the market-cost of equity : B24&Co stock has a beta of 1.50, the current risk-free rate is 3.00 percent, and the expected return on the market is 10.50 percent. What is B24&Co's cost of equity?
What would the firms payout ratio be : Suppose a firm pays total dividends of $330,000 out of net income of $2.8 million. What would the firm's payout ratio be?

Reviews

Write a Review

Financial Management Questions & Answers

  What will be the value of her retirement account

Carla Lopez deposits $9070 a year into her retirement account. If these funds have an average earning of 7 percent over the 15 years until her retirement, what will be the value of her retirement account?

  What is the effective interest cost to the borrower

John wants to buy a property for $105,000 and wants an 80% loan. The lender indicates that a fully amortizing loan can be obtained for 30 years at 12% MEY, with loan origination fees (all lender controlled fees) of $3,500. What is the effective inter..

  Asymmetric have on the optimal level of leverage

What impact does asymmetric have on the optimal level of leverage? In your answer be sure to describe the implications of adverse selection and the lemons principle for equity issuance, as well as the empirical implications.

  Potential methods of modifying end-of-year-six cash flow

You are considering an investment in a new sub-industry of interest to your firm. To understand the importance of terminal value assumptions you have decided to calculate NPV under two different sets of assumptions. The appropriate discount rate for ..

  Determine the total amount of risk-weighted assets

Determine the total amount of risk-weighted assets this bank has for the purpose of determining minimum regulatory capital amount under Basel II.

  Arithmetic average return on crash-n-burns stock

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 15 percent, –6 percent, 18 percent, 14 percent, and 10 percent. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period..

  Constructed a balance sheet reflecting this transaction

Scott is buying $5,000 worth of a stock with $4,000 in cash plus a $1,000 margin loan. If you constructed a balance sheet reflecting this transaction, the total assets would be:

  Excess capacity adjustments

osato chemicals inc had sales of $1,790,000 last year on fixed assets of $395,000. given that osato's fixed assets were being used at only 92% of capacity, then the firms fixed asset turnover ratio was____? how much sales could osato chemicals inc. h..

  Arithmetic and geometric returns for the stock

A stock has had returns of 12 percent, 19 percent, 21 percent, −12 percent, 26 percent, and −5 percent over the last six years. What are the arithmetic and geometric returns for the stock?

  Short-term credit is generally riskier than long-term credit

Risk COLLAPSE From a borrower’s standpoint “short-term credit is generally riskier than long-term credit” (Brigham & Ehrhardt, 2013). Short term credit, even if it does have better rates than the long term alternative, would still require higher paym..

  Taxable income under expensing and capitalization methods

Chris purchased an oil interest for $2 million. Recoverable barrels were estimated to be 500,000. During the year, 120,000 barrels were sold for $3.84 million, regular expenses (including cost recovery) were $1.24 million, and IDCs were $1 million. C..

  What is the horizon value

The Granite Paving Company is all-equity financed and has the following free cash flows in years 1-4: $3 million ($3M); $3.7M; $4M; $4.2M. After year 4, the firm is expected to grow at a sustainable rate of 3% per annum. With a WACC of 12%, what is t..

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