The noncallable bonds mature

Assignment Help Financial Management

Reference no: EM13928015

The noncallable bonds mature in 20 years, they have a 8% annual coupon rate and a par value of $1,000 and a market price of $1,050.00.

The tax rate is 40% and the risk free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20.

The target capital structure consists of 35% debt and balance is common equity. The company uses the CAPM to estimate the cost if common stock, and will not issue new shares. What is the WACC?

Reference no: EM13928015

Questions Cloud

What is your total real return on this investment : Mountain Minerals pays a constant annual dividend. One year ago, when you purchased shares of that stock at $40 a share, the dividend yield was 6.5 percent. Over this past year, the inflation rate has been 3.2 percent. Today, the required return on t..

Allocate the joint costs using relative weight : Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,800 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $..

Use of automatic reordering system is appropriate : Use of automatic reordering system is appropriate for which type of buying situation?

Currently manufactures a fuel valve : Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $940 Direct labor 600 Variable overhead 300 Fixed costs Depreciation..

The noncallable bonds mature : The noncallable bonds mature in 20 years, they have a 8% annual coupon rate and a par value of $1,000 and a market price of $1,050.00. The tax rate is 40% and the risk free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20..

Manufacturing are all activities of which of elements : Finance, R&D, purchasing and manufacturing are all activities of which of the following elements:

Prepare an income statement : Prepare an income statement, statement of owners equity and balance sheet for Green Day Co. as of 12-31 . . Sales 7,387,500.00 Salary Expense 450,000.00 Cash 700,000.00 Accts Receivable 500,000.00 Equipment 420,000.00 Accumulated Depreciation Equipme..

What is the appropriate current price : A company pledges to pay the following dividends: $2, $8, $3, and then a constant growth rate of 4% indefinitely. If you require an 11% return, what is the appropriate current price?

Does fair value accounting fairly portray economic situation : Does fair value accounting fairly portray the economic situation of a company or does it unfairly exacerbate any short-term problems a company is having? Why?

User Account

All Pages