What is the firm weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM131129618

Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 6.75 percent. The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $53 a share. The common stock has a beta of 1.34 and sells for $42 a share. The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is the firm's weighted average cost of capital? 

A. 10.39 percent

B. 10.64 percent

C. 11.18 percent

D. 11.30 percent

E. 11.56 percent

Reference no: EM131129618

Questions Cloud

The probability of getting at most two heads : A coin is biased so that heads is twice as likely as tails. For three independent tosses of the coin, find (a) the probability distribution of X, the total number of heads;
Examine the risk factors and the various protective factors : Examine the risk factors and the various protective factors that may mitigate the level of risk. Identify any gender differences that impact the salience of these factors.
Design a control law of the form : Write a set of equations that describes this system in the standard canonical control form as = Fx + Gu and y = Hx.
The distribution function of the random variable : With reference to Exercise 85, find the distribution function of the random variable X and plot its graph. Use the distribution function of X to find
What is the firm weighted average cost of capital : The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is the firm's weighted average cost of capital?
Find probability that the wait is greater than five minutes : Suppose the average wait to eat at Hodads is five minutes. Find the probability that you will be called in the first two minutes of your wait. Find the probability that the wait is greater than five minutes
What is the mw companys wacc : If the corporate tax rate is 35%, what is MW's WACC? If the firm has a project with an IRR of 12% would you accept the project?
A random variable whose probability density : where negative values are indicative of the flight's being early and positive values are indicative of its being late. Find the probabilities that one of these flights will be
How does the campaign affect groups or communities : Discuss your understanding of the media effects of the campaign, and include information on the following: Micro-level effects: How does the campaign affect individuals?

Reviews

Write a Review

Finance Basics Questions & Answers

  How does preferred stock differ from common stock

From a corporation's point of view, how does preferred stock differ from common stock?

  A bond that has a 1000 par value and a contract or coupon

a bond that has a 1000 par value and a contract or coupon interest rate of 11.3. the bonds have a current market value

  What is choi cost of new common stock

The Choi's Company's next expected dividend, D1, is $3.18; its growth rate is 6 percent; and its stock currently sells for $36. New stock can be sold to net the firm $32.40 per share. (a) What is Choi's percentage flotation cost? (b) What is Choi'..

  Examine parties and role involved with a letter of credit

Analyze tax treaties and purpose. Examine the parties and role involved with a letter of credit.

  An in-depth analysis of whether the market is efficient

An in-depth analysis of whether the market is efficient.

  Ipo will have on competitors in the electric car market

From the Headlines—Tesla: Comment on Tesla’s trip from incorporating in 2003 to its IPO in 2010. What impact do you think the IPO will have on competitors in the electric car market?

  What should be the amount of baruch annual contributions

Mr. Baruch expects to earn 10% per year, on average, in his mutual fund. What should be the amount of Baruch's annual contributions ?

  What are the two principal reasons for holding cash can a

what are the two principal reasons for holding cash? can a firm estimate its target cash balance by summing the cash

  Understanding supply chain and how the consumer can play a

understanding supply chain and how the consumer can play a critical role in the supply chain is an important part of

  Determinig annual installments

What if you make the first payment on loan immediately instead of at the end of first year?

  What is percy cost of common equity

Percy's CFO estimates that the company's WACC is 13.40%. What is Percy's cost of common equity? Round your answer to two decimal places

  Calculate the risk premium on its common stock

Given the following information for the stock of Foster Company, calculate the risk premium on its common stock.

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