Equity used is from reinvested earnings

Assignment Help Financial Management

Reference no: EM13929935

MM Entreprises stock trades for $52.50 per share. It is expected to pay $2.50 dividend at yearend, and the dividend is expected to grow at a constant rate of 5.50% a year. The before tac cost of debt is 7.50% and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from reinvested earnings?

Reference no: EM13929935

Questions Cloud

Public policy decision making at local level of government : Smithville is a small city with 125,000 inhabitants. Because of a weak economy, a significant part of its population is facing bad economic circumstances-an estimated 2,000 families have unemployed heads-of-households and are at or below the poverty ..

Start bakery business : You want to start a bakery business. For this, you will need a capital of $ 75,000 to start operating. If you have to operate within 4 years. That sum total should now invest 12% quarterly composite, the amount needed to keep and operate your busines..

Energy of electron : The energy of electron of wavelength 0.3 nm in Joules and electron volts

New distribution center in louisville : Your consulting firm has been selected to make a proposal to a company setting up a new distribution center in Louisville, KY. The company distributes outdoor equipment. The product line includes clothing and camping gear. The clothing is made in the..

Equity used is from reinvested earnings : MM Entreprises stock trades for $52.50 per share. It is expected to pay $2.50 dividend at yearend, and the dividend is expected to grow at a constant rate of 5.50% a year. The before tac cost of debt is 7.50% and the tax rate is 40%. The target capit..

Explain how the cash short and over account required : Explain how the Cash Short and Over account required in this case will affect the income statement.

Which stock should my sister add to her portfolio : Your sister is considering to add one additional stock to a three stock portfolio, to form a four stock portfolio. The three stocks currently held all have b=1.0, and they are perfectly positively correlated with the market. However, stock A's standa..

Find the modified internal rate of return : Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.57 percent. The initial outlay is $496,600.

Calculate the amount of the annual loan repayment : Construct a table showing your calculations of net cash flow after tax (NCFAT) and calculate the NPV. Is the project acceptable? Why or why not?

User Account

All Pages