Capital structure is limited to common equity and bonds

Assignment Help Financial Management

Reference no: EM131527365

ABC's capital structure is limited to common equity and bonds. Its target capital structure calls for 73 percent common equity and the rest long term debt. The company's outstanding bonds have a yield to maturity of 4 percent. The market risk premium for the average common stock is 11.8 percent, and the risk-free rate on US Treasuries is 4.1. ABC's beta is 0.62. Given its tax rate of 40 percent, what is ABC's weighted average cost of capital? (Show your answer in decimal for to three places, e.g., 12.3% would be entered as 0.123)

Reference no: EM131527365

Questions Cloud

Regarding the effectiveness of online learning : Which of the following is not true regarding the effectiveness of online learning?

What are the adjustments to adjust the unearned fees account : The balance in the unearned fees account, before adjustment at the end of the year, is $67,250. Of these fees, $18,000 have been earned.

Conduct inductive and deductive research : The purpose of this two-step exercise is for you to conduct inductive and deductive research using qualitative methods.

What was the amount of the adjustment for unearned revenue : Time Warner Inc. reported short-term deferred revenue of $1,497 million and $1,731 million as of December 31, 2004 and 2003, respectively.

Capital structure is limited to common equity and bonds : ABC's capital structure is limited to common equity and bonds.

Describe role of managerial accounting in your current place : Describe the role of managerial accounting in your current or former place of business. If you have not been employed by company that use managerial accounting.

Execute the commands using system calls : To indicate which features you've implemented, either circle in the PDF or highlight (boldface or color) in the Word document.

What types of products does the business sell : What types of products does the business sell? Does the business seem to be popular among consumers? How can you tell

Two large publicly traded corporations : How would you perform a quantitative analysis of a merger between two large publicly traded corporations?

User Account

All Pages