Determine what is clarks wacc to fund capital projects

Assignment Help Financial Econometrics

Reference no: EM13335068

Clark Communications has a capital structure that consists of 70% common stock and 30% long-term debt. In order to calculate Clark's WACC, an analyst has accumulated the following information:

• The company currently has 15-year, 8% annual coupon bonds that have a face value of $1,000 and sell for $1,075.

• The risk-free rate is 5%.

• The market risk premium is 4%.

• The beta on Clark's common stock is 1.1.

• The company's retained earnings are sufficient so that they do not have to issue any new common stock to fund capital projects.

• The company's tax rate is 38%.

Given this information, what is Clark's WACC?

Reference no: EM13335068

Questions Cloud

What is the angular speed of the bar : A small 15.0-g bug stands at one end of a thin uniform bar that is initially at rest on a smooth horizontal table. What is the angular speed of the bar just after the frisky insect leaps

What is the expected rate of return on the market : The expected rate of return on stock in Company D is currently 10%. Company D has a Beta of 1.40. If the risk free rate of interest is currently 3%, what is the expected rate of return on the market

Establish a uniform system of reporting : What are the problems when an MNC tries to establish a uniform system of reporting for its worldwide operations? How can these problems be solved?

What percentage of risky portfolio will maximize utility : A fund has expected risk premium of 8% and an expected SD of 20%. T-Bill is 3%. Utility function is U=E(r)-2.5SD^2. What percentage of risky portfolio will maximize utility

Determine what is clarks wacc to fund capital projects : Clark Communications has a capital structure that consists of 70% common stock and 30% long-term debt. In order to calculate Clark's WACC, an analyst has accumulated the following information

The steady state total output grows at what percent rate : In a Solow Growth model with technological change, if population grows at a 2 percent rate and the efficiency of labour grows at a 3 percent rate, then the steady state total output grows at what percent rate?

Human capital management and human resources management. : Discuss the key elements in the definition of Human Capital (HC) in relation to differentiating between the study of Human Capital Management and Human Resources Management.

Determine the taxable year of the llc : Determine the taxable year of the LLC under the Code and Regulations and two years after formation of the LLC, Barney sells half of his interest (25%) to Aldrin, Inc. Can the LLC retain the taxable year determined in part (a)? Why or why not?

Will both julia and jacque be better off if she pays him : Julia can fix a meal in 1 hour, and her opportunity cost of one hour is $50. Jacque can fix the same kind of meal in 2 hours, and his opportunity cost of one hour is $20. Will both Julia and Jacque be better off if she pays him $45 per meal to fix he..

User Account

All Pages