Target capital structure-weighted average cost of capital

Assignment Help Financial Management

Reference no: EM131886581

XYZ has a target capital structure of 20 percent common equity and the rest long term debt. The company's oustanding bonds have a yield to maturity of 7.5%. The company's common stock sells for $62.51 per share and are expected to pay a dividend of $1.87 this year. Those dividens are expected to continue to grow at a constant rate of 12.8 percent. Given its tax rate of 40 percent, what is XYZ's weighted average cost of capital?

Reference no: EM131886581

Questions Cloud

What is the expected return on the corporation stock : What is the required return on the corporation's stock? What is the expected return on the corporation's stock?

What is the net amount received by the corporation : what is the net amount received by the corporation if it acts rationally?

What is bond value if required rate of return increases : If the required rate of return is 3.50%, what is the value of the bond? What is the bond’s value if the required rate of return increases to 5.65%?

What is the yield to maturity on bond : What is the yield to maturity on a bond that you purchased for $1,069, The bond pays coupon interest semiannually.

Target capital structure-weighted average cost of capital : XYZ has a target capital structure of 20 percent common equity and the rest long term debt. what is XYZ's weighted average cost of capital?

Odd dividend policy-how much will you pay for share today : Bucksnort, Inc., has an odd dividend policy. If you require a return of 10 percent on the company’s stock, how much will you pay for a share today?

What would you be willing to pay for one patriot bond : The U.S. Treasury just announced that it will issue new "Patriot" bonds. What would you be willing to pay for one Patriot bond?

What is approximately conversion ratio of convertible bond : what is approximately the conversion ratio of the convertible bond.

Each transaction on assets-liabilities-stockholder equity : How to develop a reflection on the effect of each transaction on assets, liabilities, and stockholder's equity.

User Account

All Pages