User Account

All Pages

What is the wacc

Assignment Help Accounting Basics
Reference no: EM13760988

1. You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?

2. If the market value of debt is $155,527, market value of preferred stock is $78,829, and market value of common equity is 312,100, what is the weight of preferred stock?

3. The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?

4.ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $33 a share?

5. The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?

6. ABC, Inc., has 113 shares of common stock outstanding at a price of $97 a share. They also have 397 shares of preferred stock outstanding at a price of $54 a share. There are 414, 8 percent bonds outstanding that are priced at $33. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?

7. The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?

8. Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company's tax rate is 40%. What is the after-tax cost of debt?

9. The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?

10. ABC Inc.'s perpetual preferred stock sells for $58.1 per share, and it pays an $6.7 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?

11. The before-tax cost of debt is 6 percent. What is the after-tax cost of debt if the tax rate is 41 percent?

12. The ABC Company has a cost of equity of 23.8 percent, a pre-tax cost of debt of 5 percent, and a tax rate of 31 percent. What is the firm's weighted average cost of capital if the proportion of debt is 39.9%?

13. ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 6 percent each year indefinitely. What is the firm's cost of equity if the stock is selling for $33 a share?

14. If the market value of debt is $128,737, market value of preferred stock is $68,840, and market value of common equity is 200,589, what is the weight of common equity?

15. ABC's last dividend paid was $2.6, its required return is 16%, its growth rate is 3.7%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

16. If D1 = $4.26, g (which is constant) = 2%, and P0 = $67.54, what is the stock's expected dividend yield for the coming year?

17. A stock is expected to pay a dividend of $2.4 at the end of the year. The required rate of return is rs = 11.4%, and the expected constant growth rate is g = 7.5%. What is the stock's current price?

18. A stock's next dividend is expected to be $1.8. The required rate of return on stock is 16.3%, and the expected constant growth rate is 7.6%. What is the stock's current price?

19. If D1 = $2.1, g (which is constant) = 2.4%, and P0 = $60.5, what is the stock's expected total return for the coming year?

20. A stock just paid a dividend of $0.6. The required rate of return is 11%, and the constant growth rate is 3.9%. What is the current stock price?

21. ABC just paid a dividend of D0 = $4. Analysts expect the company's dividend to grow by 33% this year, by 28% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this stock is 17%. What is the best estimate of the stock's current market value?

22. The common stock of Connor, Inc., is selling for $89 a share and has a dividend yield of 3.9 percent. What is the dividend amount?

23. ABC's last dividend was $3.1. The dividend growth rate is expected to be constant at 20% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?

Reference no: EM13760988

Questions Cloud

Definitions of good projects : Is it a framework for designing a project? Are there actual findings, and if so,are they appropriate given the authors' definitions of good projects
Process of establishing goal required to achieve a job : Obtain great confidence by setting goal and achieving a goal you can improve your job prospects and employability skills - Process of choosing a job. Process of establishing goal required to achieve a job.
Capture the knowledge that works have about their jobs : The workplace is becoming more complex and diverse and requires managers to be creative in finding ways the bring about a competitive advantage. What things can you as a health care manager, do to capture the knowledge that works have about their job..
Is the acceptable risk posture for the organization : Does a policy that addresses the need for risk management exist? Is the acceptable risk posture for the organization included in the policy? Does the policy include details about a risk assessment
What is the wacc : The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?
Discuss the key ideas of the dominant narratives : Identify and discuss the key ideas and arguments addressed in The Dominant Narratives and Work-Family Balance or Greedy Organizations, evaluate them and reflect on their meaning in the context of current work practices.
Summary of best technology timeline : Summary of Best technology timeline and example on the given technology
Global health : The intevention mapping models.imagine that you are a health educator or other health profeeionals that is planning a prevention programs that relates to the Healthy People assigned focus area.
What is the optimal level of output for a monopolist : Question #2A monopolist faces a demand given by p = 30 - 3y. Its cost function is c (y) = 3y 2 + 6 y a) What is the optimal level of output for a monopolist? b) What is a monopolist price?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Considering investing in a new manufacturing plant

Braddock Industries is considering investing in a new manufacturing plant. The plant requires an item of equipment that costs $200,000. In addition

  A company had beginning raw materials inventory of 8000

a company had beginning raw materials inventory of 8000. during the period the company purchased 46000 of raw materials

  Selling and administrative expenses

Selling and administrative expenses include $39 million in restructuring costs.

  Evaluate and explain what types of business entities

Events in the world of corporate finance during the past few years have shown the importance of transparent and accurate financial reporting by businesses.

  Problem regarding depreciation expense

During the year, accounts receivable decreased $7,000, merchandise inventory increased $5,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2007, operating activities:

  The fisher merchandising company currently sells products

the fisher merchandising company currently sells products only through its store in lowell ma. the companys expected

  Therere four main methods for documenting specific business

there are four main methods for documenting specific business processes systems and so on. if your company asked you to

  Yang corporation wholesales repair products to equipment

yang corporation wholesales repair products to equipment manufacturers. on may 1 2014 yang corporation issued 20000000

  Sec, gasb and fasb regulations and well as gaap and sox

SEC, GASB and FASB regulations and well as GAAP and SOX

  The management of horton company estimates that credit

the management of horton company estimates that credit sales for august september october and november will be 270000

  By what percentage would sales revenue need to increase to

a company typically earns a contribution margin ratio of 25 and has current fixed costs of 80000. the general manager

  Problem related to preferred stock dividends

For 2007 Mossland Corporation reported gross profit $100,000; net income of $24,000; sales $500,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2007 profit margin?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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