Solution-Calculate abc wacc, ABC Inc. has 1,800 shares

Calculate abc wacc

Assignment Help Finance Basics

Reference no: EM133076669

ABC Inc. has 1,800 shares outstanding at $40 per share. Dividend is expected to be $3 per share in year 1 and to grow at 3% per year. ABC has two outstanding bonds. The first one has $15,000 face value, 6.5% coupon (paid semi-annually), 16 years of maturity, and price of 92.52 (92.52% of face value). The second one has $18,000 face value, 7% coupon (paid semi-annually), 25 years of maturity, and yield to maturity of 8.2%. ABC has a 30% tax rate.

-Calculate ABC's WACC.

-If ABC changed its capital structure to the industry's average debt-to-asset ratio of 0.45, what would the WACC be if its cost of debt remained unchanged?

Reference no: EM133076669

Questions Cloud

Estimate the beta of the stock : Estimate the beta of the following stock: market risk premium = 26.4 percent, RF = 7.4 percent, P01 = $ 11.40, expected dividend at the end of the year = $ 3.90

Have you ever purchased something from a different country : Have you ever purchased something from a different country? Share a time when you or someone you know was involved in a currency exchange transaction. Provide t

What was the reason for result : James Bond conducts a top-down analysis of a fund and finds that the fund has a positive alphaof 1% per annum, a tracking error of 9% per annum (TE of less than

What is us tax on crystal water dividend from twin power : Clear Water Inc., a corporation organized in Vermont, owns 190,000 shares of Twin Turbines Corp. What is US tax on Crystal Water dividend from Twin Power

Calculate abc wacc : ABC Inc. has 1,800 shares outstanding at $40 per share. Dividend is expected to be $3 per share in year 1 and to grow at 3% per year. ABC has two outstanding bo

How many new bonds must jrj issue : JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $66 in interest each six months. Their price has remained stable since they

Calculate the percentage of individuals : How did you find the participants and Calculate the percentage of individuals with the dominant and recessive trait

What is the earnings per share : A company reported the following data for the year ending 2018: There are 25,000 shares outstanding throughout the year. What is the earnings per share

After-tax free cash flow : What after-tax free cash flow does the COmpany forecast the first property will generate in the first year?

User Account

All Pages

Calculate abc wacc

Reference no: EM133076669

Reference no: EM133076669

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT