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1. BlockOut Co. has 76,622 bonds outstanding that are selling at par value. The bonds yield 8.1 percent. The company also has 5.4 million shares of common stock outstanding. The stock has a beta of 1.16 and sells for $40.6 a share. The U.S. Treasury bill is yielding 4.8 percent and the market risk premium is 7.3 percent. Blackout's tax rate is 39 percent. What is the firm's weighted average cost of capital? (Enter answer in percents.)
2. GIMP Inc. is trying to determine its cost of debt. The firm has a debt issue outstanding with 2 years to maturity that is quoted at 101.6 percent of face value. The issue makes annual payments and has an embedded cost (coupon rate) of 9.3 percent annually. What is the firm's pretax cost of debt? (Enter answer in percents.)
3. Information on Inkscape Co. is shown below. Assume the company's tax rate is 38 percent. The firm has no debt. Common stock: 203,996 shares outstanding, selling for $95.8 per share; beta is 1.11. Preferred stock: 24,379 shares of 4.8 percent preferred stock outstanding, currently selling for $84.8 per share. Market: 8.95 percent market risk premium and 4.64 percent risk-free rate. Calculate the WACC. Enter the answer in percents.
Micro Spinoffs Inc. issued 20-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,380. If the firm’s tax bracket is 20%, what is its percentage after-tax cost of debt? Assume a face value of $1,..
Arya got a new job in Charlotte. She is trying to decide whether she should rent or buy a house. Because her contract is for five years,
The High Growth Company's last dividend was $1.50. The dividend growth rate is expected to be constant at 30% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If High Growth's required return is 13% what is the company..
Your company is considering a new project that will require 8000,000 of new equipment at the start of the project.
The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, What was your net profit on the strap?
What is the geometric average return of the fund for the past three years? Put return in decimal points instead of percentage.
calculate the 2016 expected return on Facebook’s shares. Use adjusted prices to calculate returns.
Depreciation for tax purposes is computed on the straight-line method.
The spread between the yield on a 3-year corporate bond and the yield on a similar riskfree bond is 50 basis points. The recovery rate is 30%. Estimate the average hazard rate per year over the 3-year period.
How does national debt influence our personal financial future? How do student loans affect young adult ability to save?
What is one share of this stock worth to you today if you require an 11 percent rate of return?
International Worldwide would like to execute a money market hedge to cover a ¥ 250,000,000 shipment from Japan of sound systems it will receive in six months. The current exchange rate is ¥124 = $1. How would International Worldwide structure the he..
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