Calculate weighted average cost of capital using book value

Assignment Help Finance Basics
Reference no: EM13910050

1. Promo Pak has compiled the following financial data:

(a) Calculate the weighted average cost of capital using book value weights.

(b) Calculate the weighted average cost of capital using market value weights.

Source of Capital                        Book Value             Market Value             Cost

Long-term debt                            $10,000,000             $8,500,000              5.0%

Preferred stock                                1,000,000                1,500,000               14.0           

Common stock equity                     9,000,000              15,000,000              20.0

                             $20,000,000           $25,000,000

 

Reference no: EM13910050

Questions Cloud

Normalize the following table : Normalize the following table upto and including the 3NF. Submit a 1 page printout of only the final set of normalized tables in Data Architect. Just use Data Architect to do the tables. No need for E-R, mapping, relationships etc. Just tables. State..
Describe the basic tenants of object-orientation : Write a function reduce($arr, $func) that takes an array and a function as a parameter. The reduce function should apply the parameter function to each element of the array in succession to produce a single result - Write a function modeMaker() tha..
What is the probability that the average fill for the drums : If we draw a random sample of 100 drums from the shipment, what is the probability that the average fill for the 100 drums is between 49.88 gallons and 50.12 gallons?
Inventory management : Inventory Management, What additional cost is the shop incurring by using this current order size rather than the economic order quantity?
Calculate weighted average cost of capital using book value : Promo Pak has compiled the following financial data: Calculate the weighted average cost of capital using book value weights.
Explain why it is important to calculate confidence interval : Explain why it is important to calculate a confidence interval. Explain the meaning of the term "95 percent confidence." Under what conditions is the confidence interval [x + za/2(s/ 1n)] for m valid?
What is her optimal bundle of contingent claims : A risk averse person with a von-Neumann-Morgenstern utility index of: U = ln(Y) has a 20% chance that a disaster will reduce her regular income of $100,000 to zero. She can buy insurance at a rate of $0.40 per dollar of coverage. a) Will she fully, u..
Evaluate effectiveness of simple branch prediction schemes : You need to explore the effectiveness of branch direction prediction (taken vs not taken) using an actual program. Your task is to use the given branch prediction simulation infrastructure to evaluate the effectiveness of some simple branch predic..
What price should the stock sell : Gary Wells Inc. plans to issue perpetual preferred stock with an annual dividend of $6.50 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell?

Reviews

Write a Review

Finance Basics Questions & Answers

  A firm with a 14 wacc is evaluating two projects for this

a firm with a 14 wacc is evaluating two projects for this years capital budget. after tax cash flows including

  Oe year later the stock is selling for 54 per share and

suppose the call money rate is 6.8 percent and you pay a spread of 1.9 percent over that. you buy 900 shares at 46 per

  What is behind the so-called patent paradox

What is behind the so-called ‘patent paradox'? How can it be explained? Why isn't it optimal in terms of public policy to have patents that last forever? Discuss.

  What is most likely total of long-term debt equity capital

If the firm follows a maturity matching (or moderate) working capital financing policy, what is the most likely total of long-term debt plus equity capital? Please show your calculations.

  You have been given the expected return data in the

portfolio analysisyou have been given the expected return data in the following table for three assets -fg and h- for

  What is this firm debt-equity ratio

Jiminy Cricket Removal has a profit margin of 11 percent, total asset turnover of 1.13, and ROE of 14.33 percent. What is this firm's debt-equity ratio?

  Could the u.s. government reduce its regulatory constraints

Could the U.S. government reduce its regulatory constraints on investment banks in a way that that would help firms and the economy? Explain.

  Calculate the companys after-tax weighted-average cost of

orange technology solutions is considering expansion of its existing operation by assessing three different projects.

  Determine the year 1 cash flow

As a member of UA company's financial staff, you must estimate the Year one cash flow for a proposed project with the following information.

  A bond that has a 1000 par value face value and a contract

a. a bond that has a 1000 par value face value and a contract or coupon interest rate of 11.8. the bonds have a current

  The first bank of ellicott city has issued perpetual

the first bank of ellicott city has issued perpetual preferred stock with a 100 par value. the bank pays a quarterly

  Estimates that productivity improvements

A company manufactures a product using machine cells. Each cell has a design capacity of 250 units per day and an effective capacity of 230 units per day. At present, actual output averages 200 units per cell, but the manager estimates that produc..

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