Company after the bond sale if the corporate tax rate

Assignment Help Financial Management

Reference no: EM131552452

Adjusted WACC. Thorpe and Company is currently an? all-equity firm. It has three million shares selling for $40 per share. Its beta is 1.2, and the current? risk-free rate is 4.1?%. The expected return on the market for the coming year is 11.6%. Thorpe will sell corporate bonds for $40,000,000 and retire common stock with the proceeds. The bonds are? twenty-year semiannual bonds with a 8.5% coupon rate and ?$1,000 par value. The bonds are currently selling for $1,102.75 per bond. When the bonds are? sold, the beta of the company will increase to 1.5. What was the WACC of Thorpe and Company before the bond? sale? What is the adjusted WACC of Thorpe and Company after the bond sale if the corporate tax rate is 30%?? Hint?: The weight of equity before selling the bond is? 100%.

The WACC before the bond sale is 13.10%

What is the adjusted WACC of Thorpe and Company after the bond sale if the corporate tax rate is 30%?

Reference no: EM131552452

Questions Cloud

What is average daily float : In a typical month, the Gulley Corporation receives 100 checks totaling $123,000. What is the average daily float?

Price of stock at end of first year is normally distributed : You buy a stock today for $19. The price of the stock at the end of the first year is normally distributed with a mean of 19+3.48 and a standard deviation of 4.

Explain the benefits and potential drawbacks associated : Explain the benefits and potential drawbacks associated with these systems. Explain how these systems are used to relay information to the public.

Why was the consultant not allowed to teach the methodology : In July of 1999, senior management at Fems recognized that its future growth could very well be determined by how quickly and how well it implemented project.

Company after the bond sale if the corporate tax rate : What is the adjusted WACC of Thorpe and Company after the bond sale if the corporate tax rate is 30%?

Improve productivity in the organization : How each of the selected solutions can improve productivity in the organization.A suggestion of which of the solutions you would implement and why.

Explores the social impact of cinema ways : This course explores the social impact of cinema -ways in which films (both narrative and documentary) engage with complex social and political issues.

Research online for news in the area of cloud computing : Identify and describe two trends in cloud computing and what effect they might have on how businesses use IT.

What is ixture of debt and equity used to fund expansion : What is the mixture of debt and equity used to fund the expansion if it funds it using the market value D/E ratio?

User Account

All Pages