What is the firm market value weight of debt and equity

Assignment Help Financial Management

Reference no: EM131998130

Fletcher Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $49 and the book value per share is $4. Fletcher Manufacturing also has two bond issues outstanding. The first bond issue has a total face value of $60 million, a coupon rate of 7%, and sells for 93% of par. The second issue has a face value of $50 million, a coupon rate of 6.5%, and sells for 96.5% of par. The first issue matures in 10 years, the second in 6 years. Suppose the company's stock has a beta of 1.2. The risk-free rate is 5.2% and the market risk premium is 7%. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semi-annual payments. The tax rate is 35%

What is the firm's market value weight of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm's market value weight of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s cost of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s cost of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s WACC? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations. When using previous answers, use the rounded answer as it was given in the answer box).

Reference no: EM131998130

Questions Cloud

How much of his final payment went toward principle : How much of his final payment was interest? How much of his final payment went toward principle?

Companies with similar risk characteristics : Companies with similar risk characteristics and 40% debt can borrow at 9.5%. Would the company lower its WACC if it increased its debt to 40%?

Calculation of cross rate between the us dollar and euro : Based on your calculation of a cross rate between the US dollar and Euro and comparing it with the market cross rate,

What is the firm cost of debt and cost of equity : What is the firm's market value weight of equity? What is the firm’s cost of equity? What is the firm’s cost of debt?

What is the firm market value weight of debt and equity : What is the firm's market value weight of equity? What is the firm’s cost of debt? What is the firm's market value weight of debt?

Sensitivity of ocf to changes in variable cost figure : Calculate the accounting break-even point. Calculate the base-case cash flow and NPV. What is the sensitivity of OCF to changes in the variable cost figure?

The historical average annual return for the asset : Suppose the historical average annual return for the asset was 6.7 percent and the standard deviation was 12.6 percent.

In a triangular arbitrage transaction : In a triangular arbitrage transaction:

Indifferent between accepting the project and not accepting : At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?

User Account

All Pages