Defining capital structure weights templeton extended care

Reference no: EM13380932

(Defining capital structure weights) Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed to buy the business. The current owners have no debt financing but Templeton plans to borrow $300 million and invest only $100 million in equity in the acquisition. What weights should Templeton use in computing the WACC for this acquisition?

The appropriate wd weight is __ %. (Round to one decimal place)

(Individual or component costs of capital) Compute the cost of capital for the firm for the following:Compute each in % (Round to two decimal places)..

1. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11%. The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34%.

2. A new common stock issue that paid a $1.80 dividend last year. The firm's dividends are expected to continue to grow at 7% per year forever. The price of the firm's common stock is now $27.50.

3. A preferred stock that sells for $125, pays a 9% dividend and has a $100 par value that is selling at par.

4. A bond selling to yield 12% where the firm's tax rate is 34%.

Reference no: EM13380932

Questions Cloud

Problem 1 firm a has 10000 in assets entirely financed with : problem 1 firm a has 10000 in assets entirely financed with equity. firm b also has 10000 in assets but these assets

A certain model of automobile has its gas mileage in miles : a certain model of automobile has its gas mileage in miles per gallon or mpg normally distributed with a mean of 16 mpg

Describing a firms capital structure the home depot inc hd : describing a firms capital structure the home depot inc. hd operates as a home improvement retailer primarily in the

Individual or component costs of capital - your firm is : individual or component costs of capital - your firm is considering a new investment proposal and would like to

Defining capital structure weights templeton extended care : defining capital structure weights templeton extended care facilities inc. is considering the acquisition of a chain of

What is the future value of each of the following streams : what is the future value of each of the following streams of payments?1. 500 a year for 10 years compounded annually at

Capers inc is developing its cash budget for the next year : capers inc. is developing its cash budget for the next year. of capers sales 20 is for cash another 60 is collected in

Capers inc has just promoted you to chief financial officer : capers inc. has just promoted you to chief financial officer. since this is a new office in the company you are

What are the similarities and differences between project : what are the similarities and differences between project valuation and firm valuation. for example using dcf model by

User Account

All Pages