What is the weighted average cost of capital for echo inc

Assignment Help Financial Accounting
Reference no: EM132933964

The current balance sheet of Echo, Inc. records that the book value of its common equity is $515,000 and book value of its long-term interest-bearing debt is $283,000. The company has no preferred stock and the only debt it has is a 2.65% coupon bond issue that matures in twelve years and that pays coupon interest once per annum. The bonds are currently trading in the marketplace at 96.03% of their face value. The company has 24,000 shares of common stock outstanding that are trading at $27.90 per share. The beta of the common stock is 0.80, the current risk-free rate is 1.80% per annum, and the market risk premium is 5.60%. The company tax rate is 21%.

Question 1: What is the company's cost of equity?

Question 2: What is the company's cost of debt?

Question 3: What is the weighted average cost of capital (WACC) for Echo, Inc.

Reference no: EM132933964

Questions Cloud

What is green company internal growth rate : During the year Yellow Company added $14,000 of funded debt to its balance sheet. What is Green Company's internal growth rate?
What is projected ending cash balance at the end of march : The Box Store has a beginning cash balance of $2,545 on March 1. What is the projected ending cash balance at the end of March? Assume every month has 30 days.
How MIS can improve Business Productivity : How MIS can improve Business Productivity - Select any MIS topic area covered in the entire course and write 3 page paper in proper APA format
Discuss the role of the income statement and balance sheet : Discuss the role of the income statement and balance sheet in the estimation of required external funding and the use of financial leverage.
What is the weighted average cost of capital for echo inc : What is the weighted average cost of capital (WACC) for Echo, Inc.? What is the company's cost of equity? What is the company's cost of debt?
Calculate the country overall balance : Calculate the current account balance and the country's overall balance. Increase in foreign holdings of the country's assets, net $252.
Calculate the amount of profit in swiss francs : Assume you have an initial SF12,000,000. Is there an arbitrage opportunity and why? If so, show the steps and calculate the amount of profit in Swiss francs.
Write a memo descripting logical in developing budget : Write a memo descripting your logical in developing the budget and the difference in two budget and states reasons why you would recommend one budget
Calculate outright quotes for bid and ask : Calculate outright quotes for bid and ask, and the number of points spread between each. Andreas Broszio just started as an analyst for Credit Suisse.

Reviews

Write a Review

Financial Accounting Questions & Answers

  How much of the transaction price would be allocated

How much of the transaction price would be allocated to the projector, the speakers, the leather seats, and the installation service

  Determine the total effect on net income in year

Determine the total effect on net income in year 1 due to transactions related to the building and the government grant

  Identify item that reverse in sign over two consecutive year

Identify items that reverse in sign over two consecutive years. Comment on the sources and uses of cash based on the cash flow.

  Self-employed retirement plans

Self-employed individuals have a couple of option when it comes to retirement plans. One of these plans is, Solo 401(K) plan. This plan is suitable for individuals with no employees and substantial self-employment earned income; it is worth to note t..

  What is the amount and nature of the book-tax difference

Studios reported a net capital loss of $30,000 in year 5. It reported net capital gains of $14,000 in year 4 and $27,000 in year 6. What is the amount and nature of the book-tax difference in year 6 related to the net capital carryover?

  Prepare flexible budget report

Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer. Prepare a flexible budget report showing the d..

  What amount should inventory be reported

when the parts were received and payment was made, the spot rate was $.28 per stickle. At what amount should inventory be reported?

  What is your tax deduction for the month

Assuming the total transaction cost is $5,000 and your marginal income tax rate is 25%. What is your tax deduction for the 3rd month

  Calculate the npv of the project for mustang enterprises inc

Mustang Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $277,000. Calculate the NPV of the project.

  What protections enrollment potential for a economic backer

Under the Securities Act of 1933, which of the accompanying assertions most exactly displays what protections enrollment potential for a economic backer?

  Explain the importance of non-financial information

Explain the Importance of non-financial information in financial report and future possible trends in reporting of non-financial information.

  Calculate current portion of the mortgage liability

Calculate current portion of the mortgage liability at the end of this year. Mortgage payments of $3 888 541 were made during the year and the mortgage balance

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