Canister debt-to-equity ratio

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1) Box and Canister's WACC is 12.96 percent. The required return on the firm's common equity is 13.5 percent, and they have annual bonds outstanding with a coupon rate of 8 percent and a yield to maturity of 7 percent. The tax rate is 40 percent. What is Box and Canister's debt-to-equity ratio (D/E)?

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2) FMA Inc. has a market capitalization of $4.8 million and book equity of $1.2 million. The common stock is expected to pay a dividend of $3 per share next year, and the dividend growth rate is 3% per year. The firm has 75,000 shares of stock outstanding. They have market value of debt of $2 million. The value of debt on the balance sheet is $1.8 million. The semiannual bonds have a coupon rate of 8% and a yield to maturity of 6%. The tax rate is 40%. There is no preferred stock. What is the capital structure weight of equity?

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Reference no: EM131765139

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