Bonds make semiannual payments-common stock

Assignment Help Financial Management

Reference no: EM131349179

Consider the following information for Evenflow Power Co.,

Debt: 3,500 8 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 102 percent of par; the bonds make semiannual payments.

Common stock: 84,000 shares outstanding, selling for $60 per share; the beta is 1.1.

Preferred stock: 10,000 shares of 6.5 percent preferred stock outstanding (note: multiply this percentage in decimal format times 100 to get the dividend), currently selling for $105 per share.

Market: 9.5 percent market risk premium and 6 percent risk-free rate.

Assume the company's tax rate is 34 percent.

Required: Find the WACC. (Do not round your intermediate calculations.)

12.14%

11.56%

11.24%

11.06%

11.16%

Reference no: EM131349179

Questions Cloud

Estimate the current market value of debt and equity : Hugo Boss AG is a German luxury fashion and style house that is examining its financing policy for possible changes. The firm has 8-year coupon bonds outstanding with a face value of $ 400 million and interest expenses of $18.0 million a year. Estima..

Calculate annual cash flows from fixed payment annuity : Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the cu..

How many performance obligations are in this contract : On May 1, 2016, Meta Computer, Inc., enters into a contract to sell 5,500 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $94,600, to be settled by a cash payment on May 1. How many performance obligations a..

What is firm cost of preferred stock : Grill Works and More has 5 percent preferred stock outstanding that is currently selling for $57 a share. The stock's par value is $100. The market rate of return is 7 percent and the firm's tax rate is 34 percent. What is the firm's cost of preferre..

Bonds make semiannual payments-common stock : Consider the following information for Evenflow Power Co., Debt: 3,500 8 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. Common stock: 84,000 shares outstan..

Descriptive analysis of the statistical moments : Provide a written descriptive analysis of the statistical moments. For example; the first, second, third, fourth, etc. Be sure to include the cumulants and L-moments. You do not need to include the equations.

The end of ten years using the gordon growth model : An analyst is expected to have earnings in ten years of €12 per share, a dividend payout ratio of 50%, and a required return of 11%. At that time, the dividend growth rate is expected to fall to 4% in perpetuity. Estimate the terminal value at the en..

Tool manufacturing has expected ebit : Tool Manufacturing has an expected EBIT of $38,000 in perpetuity, and a tax rate of 31 percent. The firm has $69,000 in outstanding debt at an interest rate of 11 percent, and its unlevered cost of capital is 16 percent. The value of the firm is $ __..

The initial investment to purchase necessary equipment : Assume that you are looking at an investment opportunity that offers an annual operating cash flow of $40,000 per year for 4 years. The initial investment to purchase the necessary equipment is $200,000. You assume that you can sell the equipment at ..

User Account

All Pages