Reference no: EM131967423
Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity.
Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38.
The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $92.25 per share. You can assume that Jordan does not incur any flotation costs when issuing debt and preferred stock.
Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $22.35 per share, and its expected to pay a dividend of $2.78 at the end of the year. Flotation costs will represent 8% of the funds raised by issuing new common stock.
The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 40%. Determine what Kuhn Company's WACC will be for this project.
What annual rate compounded semiannually will an annuity
: At what annual rate compounded semiannually will an annuity due of $400, payable at the beginning of each 6 month period for 5 years amount to $5,000?
|
Calculate the diluted earnings per share
: Compute diluted earnings per share for 2017, assuming the same facts as above, except that $1,070,000 of 6% convertible preferred stock was issued.
|
How long will it take this woman to pay for the dress
: If interest is 6% compounded semiannually, how long will it take this woman to pay for the dress?
|
What sum of money should be set aside right
: What sum of money should be set aside right now in order to provide an income of $2,000 a month for 5 years.
|
Determine what kuhn companys wacc will be for this project
: Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38.
|
Prepare the journal entry to record the impairment
: Assume that Rohan used the double-declining balance method of depreciation, prepare the journal entry (if any) to record the impairment at December 31, 2010.
|
How much are the monthly payments
: A debt of $250,000 is due in 5 years. If payments made are monthly (at the beginning of each month), how much are the monthly payments if interest is at 6%?
|
What is the koses weighted average cost of capital
: What is the Kose's weighted average cost of capital? Use the book value of debt and the market value equity for your weights?
|
What is the amount of the safe payment to partner x
: The XY partnership is undergoing an installment liquidation. Assuming all liabilities have been paid, what is the amount of the safe payment to partner X?
|