What is the company WACC

Assignment Help Financial Management

Reference no: EM131065172

The total book value of WTC’s equity is $8 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 11%. The firm’s bonds have a face value of $4 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7%, and the firm’s tax rate is 40%. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Reference no: EM131065172

Questions Cloud

Determine the critical stress location in the welds : A 3/4-in. thick steel bar, to be used as a beam, is welded to a vertical support by two 2-in. fillet welds with a kg length of 5116-in. on the top and bottom edge as illustrated. Determine The critical stress location in the welds

Minimum redemption value investor need to realize same yield : An investor purchases a 1000 bond redeemable at par that pays semiannual coupons at a nominal rate of 8% compounded semiannually and matures in ten years. The bond will yield an annual rate of 7% convertible semiannually to maturity. If the bond is c..

What is its percentage after-tax cost of debt : Micro Spinoffs Inc. issued 10-year debt a year ago at par value with a coupon rate of 6%, paid annually. Today, the debt is selling at $1,060. If the firm’s tax bracket is 30%, what is its percentage after-tax cost of debt? Assume a face value of $1,..

What is the total aftertax cash flow to shareholders : National Business Machine Co. (NBM) has $3 million of extra cash after taxes have been paid. NBM has two choices to make use of this cash. One alternative is to invest the cash in financial assets. The resulting investment income will be paid out as ..

What is the company WACC : The total book value of WTC’s equity is $8 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 11%. The firm’s bonds have a face value of $4 million and sell at a price of 110% of face valu..

Calculation of annual bond yields : Recalling the standard (annual interest accrual) calculation of annual bond yields. b) A 5% one-year bond with a face value of $100 sells for $106. What is the bond's yield to maturity (redemption yield)? c) If the interest rate is 10% what is the pr..

Discuss the concept of absurdity in albert camus : You must: address the prompt(s) fully (write a paragraph for each); (your response should be a well-thought-out paragraph for each); and use standard English and grammar.

Replacement analysis based on annual equivalent of cash flow : The Quick Manufacturing Company, a large profitable corporation, is considering the replacement of a production machine tool. A new machine would cost $3700, have a 4- year useful and depreciable life, and have no salvage value. For tax purposes , su..

Determine the angle ? for minimum weight of the strut : Assuming that collapse occurs by Euler buckling of the strut, determine the angle θ for minimum weight of the strut.

User Account

All Pages