What is your firm weighted average cost of capital

Assignment Help Financial Management
Reference no: EM131552460

Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure:

Bonds

coupon rate = 6%

yield-to-maturity = 5.5%

Market value of bonds = $25 million

Book value of bonds = $30 million

Common stock

Book value of common shares = $25 million

Market value of common shares = $50 million

Required rate of return (r) = 10.5%

What is your firm’s Weighted Average Cost of Capital  (report as a raw number, i.e. if it is 10.43%, plug in 10.43) ?

Reference no: EM131552460

Questions Cloud

Calculate the company book value wacc : A company's book value of equity is $200 million, and its book value cost of equity is 24%. Calculate the company's book value WACC.
Write down coulomb law : Explain and show in what way Coulomb's data given in the table support his law. Be quantitative.
Adjusted wacc of thorpe and company after the bond sale : What is the adjusted WACC of Thorpe and Company after the bond sale if the corporate tax rate is 30%?
What were the consequences of jeffersons louisiana purchase : What were the consequences of Jefferson's Louisiana Purchase for the new nation during the first part of the 19th century?
What is your firm weighted average cost of capital : Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure. What is your firm’s Weighted Average Cost of Capital
Has globalization been good or bad for the post 1945 world : What are the chief successes and failures of United States foreign policy since World War II? Why did these successes or failures occur?
Stock at the end of the first year is normally distributed : You buy a stock today for $19. The price of the stock at the end of the first year is normally distributed with a mean of 19+3.48 and a standard deviation of 4.
How much damage was controlled and minimized : Discussing step or majors which were taken to conquer this issue.How much damage was controlled and minimized.
What is average daily float : In a typical month, the Gulley Corporation receives 100 checks totaling $123,000. What is the average daily float?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms cost of equity

wxMaxima Industries just paid an annual dividend of $1.44 a share. The market price of the stock is $24.62 and the firm promises a constant growth rate in dividends of 3.5 percent. What is the firm's cost of equity?

  Compute capital gains yield

Quiver Archery’s bond currently is selling for $1,065; its value one year ago was $990. The bond has a $1,000 maturity value and a coupon rate equal to 7% and it matures in 8 years. Interest is paid annually. (a) Compute the current yield and capital..

  What nominal rate will you charge your customers

As a jewelry store manager, you want to offer credit sales to your customers, with interest on outstanding balances paid monthly. However, to finance your working capital, you must borrow funds from your bank at a nominal 6%, monthly compounding. For..

  Interest deferred period the loan accumulated interest

Bank of Land lends you money today but requires no payments for 3 years. However, during this interest deferred period the loan accumulated interest at 6% rate, compounded quarterly. The bank amortizes the loan over five year period, requiring quarte..

  What do i plan to do to bring about this change

Values. What values are most central and critical to how you approach work? What values do you want to be known for practicing (not just preaching)?

  The firm have to issue to receive the needed funds

Gillian Stationery Corporation needs to raise $600000 to improve its manufacturing plant. It has decided to issue a $1000 par value bond with an annual coupon rate of 8.0 percent with interest paid semiannually and a 10 year maturity. Investors requi..

  Calculate the payback-cash flows for two products

Assume a $250,000 investment and the following cash flows for two products. Year Product X Product Y 1 $ 90,000 $ 50,000 2 90,000 80,000 3 60,000 60,000 4 20,000 70,000 a. Calculate the payback for products X and Y. Payback Product X Years Product Y ..

  Determine the annual returns for the portfolio

Calculate the average and standard deviation of annual returns for each company.- Determine the annual returns for this portfolio.

  What is portfolio beta for a portfolio of five stocks

What is the portfolio beta for a portfolio of five stocks A, B, C, D, and E. with required rates of return of 10%, 12%, 11%, 9%, and 14%, respectively and betas

  Write a research report on the sensitivity of stock return

You need to write a research report on the sensitivity of the stock return to the market return. The following model can be used to estimate the sensitivity of the stock return to the market return.

  Investor wants to acquire new stock under a rights plant

If a shareholder or investor wants to acquire new stock under a rights plant they must:

  Concrete test instrument used in construction for evaluating

A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces is under consideration by construction firm.

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