Equity in the weighted average cost of capital computation

Assignment Help Financial Management

Reference no: EM132068675

Taylor Enterprises has 12,000 bonds outstanding that have a 6% coupon rate. The bonds are selling at 98% of face value, pay interest semi-annually, and mature in 28 years. There are 400,000 shares of 9% preferred stock outstanding with a current market price of $83 a share. In addition, there are 1.40 million shares of common stock outstanding with a market price of $54 a share and a beta of 1.2. The common stock paid a total of $1.80 in dividends last year and expects to increase those dividends by 4% annually. The firm’s marginal tax rate is 34%. The overall stock market is yielding 12% and the U.S. Treasury bill rate is 4.0%.

What weight should be given to equity in the weighted average cost of capital computation?

please show the formula and then show the numbers pluged into the formula. NO EXCEL

Reference no: EM132068675

Questions Cloud

Major strengths and flaws in feedback control system : What do you see as the major strengths and flaws in the feedback control system used in the schools in this scenario?

What was the net operating working capital : What was the net operating working capital at the end of 2005?

Dividend analysis-particular discounted cash flow analysis : Consider the following statement “Dividend analysis and in particular DCF (Discounted cash flow analysis) of earnings data serves

Uses matrix structure organization : Provide an example of an airline that uses matrix structure organization.

Equity in the weighted average cost of capital computation : What weight should be given to equity in the weighted average cost of capital computation?

Payback period for project with the cash flows : Compute the payback period for a project with the following cash flows, if the company's discount rate is 14%.

Compare and contrast management and leadership : Compare and Contrast management and leadership. Share your personal perspective about leadership in workplaces, among others.

Perpetual debt outstanding carrying coupon rate : The Jackson Court Company (JC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6%.

Pet-services business that will offer dog grooming : You plan to open a pet-services business that will offer dog grooming, day care, and boarding.

User Account

All Pages