What is the company wacc

Assignment Help Accounting Basics
Reference no: EM133072165

Question - Masterson, Inc., has 7 million shares of common stock outstanding. The current share price is $29, and the book value per share is $10. The company also has two bond issues outstanding. The ?rst bond issue has a face value of $120 million, has a coupon rate of4 percent, and sells for 92 percent of par. The second issue has a face value of $105 million, has a coupon rate of 3 percent, and sells for 104 percent of par. The first issue matures in 22 years, the second in 7 years.

Suppose the most recent dividend was $4.75 and the dividend growth rate is 5.2 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 25 percent. What is the company's WACC?

Reference no: EM133072165

Questions Cloud

What is the npv of project : Consider a project that requires spending of $15,000 immediately and generates $6,000 per year for the next 4 years (assume each $6,000 comes at the end of each
What is the bank cost of preferred stock : Sixth Fourth Bank has an issue of preferred stock with a $6.00 stated dividend that just sold for $122 per share. What is the bank's cost of preferred stock
Which tools should denise consider using for project : Denise is the head of a project team which will be developing an information system for a small healthcare provider. Her team is ready to begin the planning pha
What is the yield to maturity : Young Company bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%.
What is the company wacc : Suppose the most recent dividend was $4.75 and the dividend growth rate is 5.2 percent. The tax rate is 25 percent. What is the company's WACC
What is expected rate of return : Suppose that you have $1 million and the following two opportunities from which to construct a portfolio: a. Risk-free asset earning 14% per year
Estimate the average age of depreciable assets : Estimate the average age of depreciable assets, the percentage of PP&E that has been used up, and the remaining useful life
Discuss different system mobile functionalities : Compare and Contrast mobile applications vs websites. Discuss different system mobile functionalities.
Prepare hardy photography bank reconciliation on november : Prepare Hardy Photography's bank reconciliation on November 30?, 2024. Nov. 4 check #: 622, item: quick mailing, check: $45, balance: $455

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd