User Account

All Pages

Calculate the weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM133110023

You have been assigned to calculate the Weighted-Average-cost- of Capital for your firm, which has two sources of long-term capital. The Company's marginal tax rate is 28%.

First, there are 6,500,000 shares of common stocks, which are currently selling of $153.12. Recently, the firm announced EPS of $12.64. You feel that it is reasonable to assume that earnings will grow at 1.65% into the future.

Second, there is an issue of 260,000 coupon bonds with a face value of $1000. Which pays 6.35% (annual) coupons and mature in twenty three years. These bonds care currently trading for $1,182.10.

What is the firm's weighted-average -cost -of capital?

Reference no: EM133110023

Questions Cloud

What is the operating cash flow? : Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar-charged motorcycles? (who wants to
What computer-assisted audit technique could lou use : He offers no proof or names. What computer-assisted audit technique could Lou use to help him substantiate or refute the employee's claim
Computing required rate of return : A share is traded at $80, a $4 dividend is expected by the end of the first year (D1 = 4); over time, this dividend is supposed to grow at a constant rate g. Th
What is the book value per ordinary share after declaration : The entity declared 20% share dividend. What is the book value per ordinary share after declaration of share dividend
Calculate the weighted average cost of capital : You have been assigned to calculate the Weighted-Average-cost- of Capital for your firm, which has two sources of long-term capital. The Company's marginal tax
What amount of cash collections from credit sales : During the first and second months it expects credit sales of $42,000 and $62,000, respectively. What amount of cash collections from credit sales
Margin and dividend yield ratio remain constant : In 2005, sales were $ 350 million, while net profit was $ 10.5 million. The company paid dividends of $ 4.2 million to common shareholders.
What is the maximum mass of AgCl : What sample mass should be taken to have the percentage of ZrCl4 exceed the mass of AgCl produced by a factor of 100
Define the basics of the two initiatives mips and apm : Define the basics of the two initiatives, MIPS and APM. What are the major similarities and differences between the two programs

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the portfolio analytic duration after the sale

A portfolio manager has a portfolio consisting entirely of investment grade corporate bonds. The portfolio manager intends to sell 30% of the portfolio holding.

  How interest rates affect households

How interest rates affect households and other sectors of the economy

  Black-scholes closed form solution

Provide a brief description of the Black-Scholes closed form solutions for European Call and Put options to include the relevant formulae and assumptions of the

  Compute the price of a risk-free bond

1) Compute the price of a risk-free bond with a face value of $ 1,000 that has seven years left to maturity, a coupon rate of 8%, and makes annual interest paym

  What is the present value of a security

What is the present value of a security that will pay $36,000 in 20 years if securities of equal risk pay 4% annually? Round your answer to the nearest cent.

  Calculate the dollar cost of each of the proposed plans

If the firm had made a purchase of $100,000 for which it had been given terms of 2/10 net 30, would it increase the firm's profitability to give up the discount and not borrow as recommended in part b? Why or why not?

  What is the annual operating cash flow

Potato Game, Inc. is considering a new five-year expansion project that requires an initial fixed asset investment of $6.089 million. The fixed asset will be de

  Determine the breakeven point

Firm A has fixed operating costs of $40,000 per year and variable costs of $6.50 per unit. Sale price per unit is $16.

  Determining the expected effective financing rate

Will the expected effective financing rate be higher, lower, or the same as financing with dollars? Explain.

  Initial project costs for net working capital

What amount should be included in the initial project costs for net working capital?

  What is the stock price

If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 11.4%, what is the stock price?

  Evaluate the firm financial performance for fiscal 2015

You are an analyst covering Screen Microtech and have been asked to evaluate the firm's financial performance for fiscal 2015. Specifically, you have been asked to review the accounting decisions that the firm has made and prepare a revised 2015 ..

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