What is jakes weighted average cost of capital

Assignment Help Financial Management

Reference no: EM13728207

Team B Jake's Sound Systems has 390,000 shares of common stock outstanding at a market price of $31 a share. Its beta is 0.8. Market expected return is 13% and risk-free rate is 6%. Jake's also has 7,700 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 9% coupon, pay interest annually, and mature in 14 years. The bonds are selling at $950. The company's tax rate is 40%. What is Jake's weighted average cost of capital?

Reference no: EM13728207

Questions Cloud

Which stakeholders benefited and which were hurt : Which stakeholders benefited, and which were hurt, by JPMorgan's actions in this case? For those that were hurt, wasn't this a risk they were willing to take

Prepare a marketing plan for waters bottling company : Prepare a marketing plan for Waters Bottling Company (WBC)'s

Discuss the advisability of using modular assemblies : Discuss the advisability of using modular assemblies in manufacturing. what are the advantages and disadvantages.

Describe the liability of the partnership-fresher flowers : Fran, Joe, and Mike formed a general partnership to operate a flower shop called Fresher Flowers. One of Fran’s jobs is to make deliveries using the partnership truck. In one such delivery, Fran negligently ran a stop sign, striking a car driven by P..

What is jakes weighted average cost of capital : Team B Jake's Sound Systems has 390,000 shares of common stock outstanding at a market price of $31 a share. Its beta is 0.8. Market expected return is 13% and risk-free rate is 6%. Jake's also has 7,700 bonds outstanding with a face value of $1,000 ..

Investment project costs-annual cash flows : An investment project costs $10,000 and has annual cash flows of $2,970 for six years. What is the discounted payback period if the discount rate is zero percent? What is the discounted payback period if the discount rate is 6 percent?

Briefly describe five opportunities for continued growth : Continued Growth for Zara and Inditex: Briefly describe five opportunities for continued growth during the next five years for Zara's parent, Inditex, SA

What is the required return on franc flows : You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be SF 21 million. The cash flows from the project would be SF 5.9 million per year for the next five years. The dollar required ..

Investment opportunity-What is the NPV of the project : Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €1.8 million in Year 1, €2.6 million in Year 2, and €3.5 million in Year 3. The current spot exchange rate is $1.36/€..

User Account

All Pages