What is your best estimate of mimcs wacc

Assignment Help Financial Management

Reference no: EM131972308

Industrial Machineries Corporation (MIMC) has a pre-tax cost of debt of 7.6 percent, beta of 1.5 and cost of preferred stock of 8.5 percent.

MIMC has 220.000 shares of common stock outstanding, which currently is traded at a market price of $27 per share in the Frankfurt Stock Exchange(FSE).

There are 25,000 shares of preferred stock outstanding at a market price of $41 per share.

The bond issues have face value of $ 550,000 and currently the issues are traded at $556,600 in FSE bond market.

Market risk premium is 7.13 percent and risk free rate is 3.6 percent. The MIMC ‘s tax rate is 37 percent. What is your best estimate of MIMC's WACC?

Please show your work step by step. You must explain, in 4 lines, how you calculate WACC for MIMC.

Reference no: EM131972308

Questions Cloud

Determining the lower the monthly payments : How much longer (in months) will it take you to repay this loan than you had originally planned?

Possibly reduce its economic exposure to exchange rate risk : If it borrows yen, it will be exposed to exchange rate risk. How can CRI borrow yen and possibly reduce its economic exposure to exchange rate risk?

Annual rate of returns : Assume no dividends paid and the AAR and GAR are based on annual rate of returns. (round to the nearest $1 and show your answer like this $394)

Create a rea model using the revenue cycle : Sales Orders are received from customers via the web site and reviewed by a sales. Create a REA Model using the revenue cycle with the information given above.

What is your best estimate of mimcs wacc : Industrial Machineries Corporation (MIMC) has a pre-tax cost of debt of 7.6 percent, beta of 1.5 and cost of preferred stock of 8.5 percent.

What would you say to the students that accompany your brief : what would you say to the students that accompany your brief and concise bullet points? Although not required, if you have access to a mic

How much is sally inheritance worth today : When Sally turns 30 years old, she will receive $10,000 per year for 10 years. How much is her inheritance worth today, assuming money earns 7% annually?

Understand the uncertainty of future cash flow : There are many possible cash flow outcomes for any risky project, describe one that can be used to better understand the uncertainty of future cash flow

Provide some examples of sources of short-term credit : Provide some examples of sources of short-term credit? How can use these examples to evaluate the cost of financing as a key determinant

User Account

All Pages