What discount rate or wacc should use

Reference no: EM131934143

Question: If a firm is considering a new investment, that will generate an internal rate of return of 11.5%, with $10,000,000 in bonds, $2,000,000 in preferred stocks and $8,000,000 in common stock and to finance the investment the firm issues 20 year bonds with a $1,000 par value, 6% coupon rate and a market price of $950. What discount rate or WACC should they use ? Preferred stock is paying a $2.50 annual dividend and sold for 25.00 per share. Common stock selling for 50.00 per share with a Beta of 1.2

Tax rate: 34%

Expected market return of the S&P 500 is 13%

10 year treasury note yeilding 3.5%

Reference no: EM131934143

Questions Cloud

What is the cash flow from leasing relative to purchasing : Artisan's is considering leasing a new computer. The lease terms include five annual payments of $1,500 with the first payment occurring when the lease.

What is needed to create an irrevocable offer : What are the general goals and purposes of Article 2 of the UCC? What is the greatest impact of the UCC on business in the United States?

Discuss your thoughts about the given legislation : Discuss your thoughts about this legislation. Do you think it is fair? Should this money only go to those who have paid into the Medicare system.

Latest value of the five day simple moving average : What is the latest value of the 5 day simple moving average?

What discount rate or wacc should use : If a firm is considering a new investment, that will generate an internal rate of return of 11.5%, with $10,000,000 in bonds, $2,000,000 in preferred stocks.

What is your net profit on position : If at expiration the stock is trading at $71, what is your net profit on this position?

Describes the push for democracy that we saw in egypt : Describes the push for democracy that we saw in Egypt - From the videos and articles something needs to happen in Egypt very soon or more lives will be lost

Company capital structure weights on a book value basis : What are the company's capital structure weights on a book value basis? Which are more relevant, the book or market value weights?

Describe the main features of the errors : Describe the main features of the errors, their consequences, and their possible sources (i.e., what are features of human memory that make errors possible?).

User Account

All Pages