Sapp truckings balance sheet shows a total of noncallable

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Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity is $65 million. The current stock price is $22.50 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?

Which of the following statement is correct? If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV. If Project A's IRR exceeds Project B's, then A mjust have the higher NPV. If a project's MIRR can never exceed its IRR. If a project with normal cash dlows has an IRR less that theWACC, the project must have a positive NPV,if the NPV is negative, the IRR must also be negative. The Ackert Company's last dividend was $1.55% the dividend growth rate is expected to be constant at 1.5% for 2 years, after which divivdends are expected to grow at a rate of 8.0% forever, The firm's required return  is 12.0%. What is the best estimate of the current stock price?

Reference no: EM13567645

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