User Account

All Pages

What is the firm wacc

Assignment Help Accounting Basics
Reference no: EM133027677

Question - Given the following information about ABC corporation:

Book Value Security Amount ($ millions)

Common Stock 10

Preferred Stock 5

Bonds 5

Retained Earnings 2

Total 22

The common stock is currently trading at $10/share and there are 1 million shares outstanding. The firm has a Beta of 1.2, the economy's risk-free rate is 2% and the equity market premium is 4%. ABC's preferred stock is trading at $12/share and there are also 1 million shares outstanding. The par value of the preferred stock is $5 and it has a dividend yield of 20%. A series of 5,000 bonds were issued with a face value of $1,000. These bonds are now currently selling at $960 each. The bonds have a 10-year maturity and a coupon rate of 10% paid semi-annually. The firm's corporate tax rate is 30%. What is the firm's WACC?

Reference no: EM133027677

Questions Cloud

What is amount of goodwill arising from hanson acquisition : Marvin's goodwill suffered an impairment loss of $5,000 during 2019. What is the amount of goodwill arising from Hanson's January 1, 2019 acquisition
Find the amount which is invested : The CD chosen returns 6% per annum, and the bond 7 %. Find the amount, which is invested, in the CD and in the long-term bond
How much they will need to have the day : How much they will need to have the day they retire in order to fund their retirement with no additional contributions
What is the monthly mortgage payment : What is the monthly mortgage payment on the new house, assuming they have the $80,000 down payment? Will they qualify for the new mortgage loan
What is the firm wacc : The bonds have a 10-year maturity and a coupon rate of 10% paid semi-annually. The firm's corporate tax rate is 30%. What is the firm's WACC
Calculate equity value and firm value : SAM basic shares outstanding used in calculations (provide exact number of shares) - provide the excel file used to calculate Equity Value and Firm Value
What is the market yield you would expect : What is the market yield you would expect on a 3-year, BB-rated corporate bond that pays a 7.5% annual coupon
Serious ethical concern that impacts managed care : Focused on managed care, the different plans, and ethical concerns related to managed care. After reviewing the information that we covered in the lecture
Calculate the break-even point in hours for the firm : Calculate the break-even point in hours for the firm as a whole, using the weighted average contribution margin method (i.e., composite method)

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.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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