Determine what is the companys wacc of par

Assignment Help Financial Econometrics

Reference no: EM13335230

Erna Corp. has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years.

Suppose the most recent dividend was $4.10 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 35 percent. What is the company's WACC?

Reference no: EM13335230

Questions Cloud

Write a function called stream-map : Write a function that produces a stream of positive prime numbers . Use that stream to create a list of the product of all pairs of consecutive prime numbers up to a given value.

Is the value of intermediate goods and services included : Why must the total value of expenditures in the economy be equal to total income? Is the value of intermediate goods and services included in GDP? Explain.

What is general industries expected current share price : general industries is expected to generate $22 million, $26 million, $29 million, $30 million, and $32 million in free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 3% per year.

Find the minimum power rating of the car : An electric car accelerates for 11 s by drawing energy from its 270-V battery pack. Find the minimum power rating of the car

Determine what is the companys wacc of par : The first bond issue has a face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par.

Find the magnitude and size of the point charge : A conducting spherical shell with a total uniformly distributed charge of -4Q on the combination of inner and outer surfaces has a point charge at the center of the shell

Calculate the net present value of this project to company : Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time.

Find an expression for the speed of the charge : V_A is the electric potential at point a. V_A ( V_B

What is the buoyant force on the diving bell : A diving bell has a weight of 100000 N when measured on shore. What is the buoyant force, FB, on the diving bell

User Account

All Pages