Shares of common stock-weighted average cost of capital

Assignment Help Financial Management

Reference no: EM13947192

Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yield 9.9 percent. The company also has 4.4 million shares of common stock outstanding. The stock has a beta of 1.6 and sells for $40 a share. The U.S. Treasury bill is yielding 6 percent and the market risk premium is 9 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital?

13.01 percent

18.07 percent

15.34 percent

10.68 percent

7.67 percent

Reference no: EM13947192

Questions Cloud

What bid price per stamp should you submit : Consider a project to supply 60,800,000 postage stamps to the U.S. Postal Service for the next 5 years. You have an idle parcel of land available that cost $760,000 five years ago; if the land were sold today, it would net you $912,000, aftertax. You..

Savings account earning interest at a rate : If Jackson deposits $60 at the end of each month in a savings account earning interest at a rate of 3%/year compounded monthly, how much will he have on deposit in his savings account at the end of 5 years, assuming he makes no withdrawals during tha..

Calculate the value of the target firms equity : Teddy Corp is considering acquiring Daniels Company. Daniels has a capital structure consisting of $5 million (market value) in 11% bonds and $10 million (market value) of common stock. Calculate the current WACC for the Daniels Company. Calculate th..

Use the compound interest formula and the annuity formula : Luis has $190,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $3000/quarter into the new account until h..

Shares of common stock-weighted average cost of capital : Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yield 9.9 percent. The company also has 4.4 million shares of common stock outstanding. The stock has a beta of 1.6 and sells for $40 a share. The U.S. Tre..

Change in net working capital must be considered as part : When evaluating a capital budgeting project, the change in net working capital must be considered as part of: a. the initial investment b. the incremental operating cash inflows c.th operating cash inflows d. the operating case outflows

What must the beta be for the other stock in your portfolio : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.26 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

The company also has two bond issues outstanding : Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. Assume that the overall cost of debt is the weighted average of tha..

What is the net asset value per share : The Hirt & Block mutual fund has assets of $147 million, liabilities of $7 million and 7 million shares outstanding. What is the net asset value per share?

User Account

All Pages