What is the weighted average cost of capital for firm

Assignment Help Financial Management
Reference no: EM131933541

The current stock price for a company is $32 per share, and there are 6 million shares outstanding. The beta for this firms stock is 1.4, the risk-free rate is 4.2, and the expected market risk premium is 5.7%. This firm also has 270,000 bonds outstanding, which pay interest semiannually. These bonds have a coupon interest rate of 8%, 11 years to maturity, a face value of $1,000, and a current price of 1,035.78. If the corporate tax rate is 31%, what is the Weighted Average Cost of Capital (WACC) for this firm?

Reference no: EM131933541

Questions Cloud

Time to reach financial goal-future value of an annuity : You expect to earn 13% annually on the account. How many years will it take to reach your goal? Find the future values of these ordinary annuities.
Return on equity under different financial leverage ratios : The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million,
What is the percent market value of equity for this firm : If these bonds have a coupon interest rate of 9%, 8 years to maturity, a face value of $1,000, what is the percent market value of equity for this firm?
What is the percent market value of debt for this firm : The current stock price for a company is $47 per share, and there are 7 million shares outstanding. what is the percent market value of debt for this firm?
What is the weighted average cost of capital for firm : The current stock price for company is $32 per share and there are 6 million shares outstanding. What is Weighted Average Cost of Capital (WACC) for this firm?
What is the capital surplus account : What is the capital surplus account after the 10 percent stock dividend?
What is the NPV of the proposed project for this firm : What is the NPV of the proposed project for this firm?
What will the present value of portfolio : What will the Present Value of his portfolio, assuming a 9% discount rate and NPER is 10 years?
Companies avoiding reductions or cuts to regular dividends : What are the major reasons given for companies avoiding reductions or cuts to regular dividends?

Reviews

Write a Review

Financial Management Questions & Answers

  Which represent the highest and best use of the land

A developer plans to purchase a vacant lot to build apartment units, which represent the highest and best use of the land.

  Which one has the most unsystematic risk

Consider the following information about Stock I and II. State of Economy Probability of State of Economy Rate of Returns If State Occurs. Which one has the most unsystematic risk? Which stock is riskier? Explain

  An advantage of coupons as a sales promotional tool is that

An advantage of coupons as a sales promotional tool is that . . .

  What is the standard deviation of the stock returns

You find a certain stock that had returns of 14 %, -27 %, 19 %, and 21 % for four of the last five years, respectively. The average return of the stock over this period was 9.5 %. What is the standard deviation of the stock's returns?

  What is the advantage of using forward contracts

Suppose that you are a financial manager of a company that exports mainly to England. You expect to receive a huge payment in British pounds from your customer in a couple of months. To avoid the potential adverse move of British pound, you have deci..

  Borrowing money can be high-risk-high-reward option

The world of finance teaches that borrowing money can be a high-risk, high-reward option.

  How to prepare a monthly schedule of cash receipts

Seventy percent of Ellis' sales are on credit with 60 percent of receivables collected in the month after the sale and the rest of receivables collected in the second month after the sale.

  What would be the after-tax amount

Assume that Jane Adams pays income taxes at a 35 percent rate. What would be the after-tax amount on $100 of interest income she receives?

  Insurer economics

Calculate the 2015 ROI for HiReturns as shown in the "Insurer Economics" lecture in class.

  A valuable firm will tend to

The explicit and implicit costs associated with corporate default are referred to as the _____ costs of a firm. A valuable firm will tend to:

  Calculate the price of zero coupon bond

Calculate the price of a zero coupon bond that matures in 14 years if the market interest rate is 5.45 percent.

  Two-asset portfolio-what is the expected return of portfolio

Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 17% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..

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