A firm has 750 bonds outstanding that are selling for $989 each, 2,500 shares of preferred stock with a market price of $47 per share, and 30,000 shares of common stock valued at $56 per share. What weight should be assigned to the common stock when computing the firm's weighted average cost of capital? a. 54.00% b. 55.45% c. 66.16% d. 62.08% e. 47.11%
Q: A stock price has an expected return of 16% and a volatility of 30%. The current price is $42. What…
A: European call option refers to an option which provides right to the owner to acquire the security…
Q: A household savings-account spreadsheet shows the following entries for the first day of each month:…
A: IRR is the internal rate of return at present value of cash inflows is equal to the present value of…
Q: Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a…
A: Net present value is determined by deducting the initial investment from the current value of cash…
Q: A payment of $2,800 is due in 2 years and $3,500 is due in 4 years. These two original payments are…
A: Present ValuePresent Value (PV) of a future amount is value of that amount in current time period.…
Q: You have some extra cash this month and you are considering putting it toward your car loan. Your…
A: The objective of this question is to determine how much time will be reduced from the loan term if…
Q: The price of a European call that expires in six months and has a strike price of $30 is $2. The…
A: Put call parity equation is used for calculation of the put price and has basic fundamental equation…
Q: The company has invested $400,000,000 in stocks and $600,000,000 in bonds. Stocks has a standard of…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Payne Products had $2.4 million in sales revenues in the most recent year and expects sales growth…
A: Return on equity (ROE) essentially measures how efficiently a company is using its shareholders'…
Q: The Pharoah Department of Transportation has issued 25-year bonds that make semiannual coupon…
A: Face value = $1,000Coupon rate = 10.425%Years to maturity= 25 x 2=50YTM = 10.30%/2=5.15%
Q: A machinery was brought in the years 2017 for $100,000. The life of the machinery is 10 years. The…
A: The objective of the question is to calculate the net cash flow from the salvage of a machinery. The…
Q: 1) High-Low Method to find the equation for a mixed cost XYZ Manufacturing wants to understand its…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Go to the worksheet labeled 4-Working Capital. What is the Q3 2021 quarterly COGS amount implied by…
A: The term "COGS" stands for "Cost of Goods Sold." It is an accounting measure that represents the…
Q: Fitzgerald Industries has a new project available that requires an initial investment of $5.1…
A: Net Present Value (NPV) is a technique of capital budgeting used to determine the profitability of…
Q: Company Smart is going to buy a new machine to replace the old one which was exhausted. There are…
A: The objective of the question is to calculate the Equivalent Annual Cost (EAC) of two machines P and…
Q: Claim against assets are represented by__.I am not satisfy give downvote A. saved earning B.…
A: Claims against assets represent the various commitments and interests that stakeholders hold in a…
Q: Keller Cosmetics maintains an operating profit margin of 8.80% and a sales-to-assets ratio of 3.05.…
A: The ROA refers to the measure of the efficiency of the company in utilizing the assets of the…
Q: What is the yield to maturity of a nine-year, $5,000 bond with a 4% coupon rate and semiannual…
A: A bond refers to an instrument that is used to raise debt capital for the issuing organization from…
Q: Average return Variance Covariance with stock Covariance with bond Stock 0.148 Bond 0.06 0.014697…
A: Portfolio return:Portfolio return refers to the overall performance of a portfolio of investments…
Q: . What is the company's WACC? (D
A: Market Value of Equity=Book Value of Equity*Market to Book RatioMarket Value of Equity=13*1.5Market…
Q: Lauren has a margin account and deposits $50,000. Assume the prevailing margin requirement is 40%,…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: You want to buy a condo in Toronto that costs $860, 100 and have accumulated a 15.00% down payment.…
A: Mortgage Loan:A loan happens when one or more people, companies, or other entities lend money to…
Q: the residual value of the invested equipment is 70 million yuan. If MARR is 4%, try to calculate the…
A: IRR is the discount rate of a project wherein its net present value equals zero. Internal rate of…
Q: Assume that you own a $1 million par value corporate bond that pays 7% in coupon interest (3.5%…
A: The objective of the question is to calculate the bond's price if the market rate increases by 50…
Q: NPV (Millions of $1 200 120 40 9 -60 -120 -200 -20 -12 4 Price per Unit Required Return Variable…
A: The graph is used by corporates and governments in order to make key decisions in order to pick up a…
Q: Sandy has just bought a Dacota Mining zero-coupon bond. The bond has 8 years to maturity. The yield…
A: Zero coupon bond is the bond that are not paid any coupon payment and only par value of bond is paid…
Q: 2019 financial statements for Growth Industries are presented below. ales Costs BIT INCOME…
A: Sales=$330000Net income=$72680Total assets=$330000Account payable=$16000Growth rate=g=30%Dividend…
Q: An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor…
A: In a collar Option strategy , the following transactions are executed to limit the Profit and…
Q: 19. Outdoor Sports is considering adding a putt-putt golf course to its facility. The course would…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: You purchased 1000 shares of stock in Cumberland Software for $3 per share on January 1, 2006. Over…
A: 1. Initial Investment: 1000 shares at $3 per share = $3,0002. Annual Dividends: 7 cents per share…
Q: Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly.…
A: Value of the firm on 2024 = 3.1 / 0.1 = 31 millionYearFree cash flowPV factor @ 10%Present value…
Q: Wayne Enterprises generates perpetual annual EBIT of $320. (Assume that the EBIT occurs at year end…
A: Information providedBefore leverage:EBIT = $320cost of equity = 9.6%After leveragedebt =…
Q: Teens an a. Use a two-way data table to show the impact of down payment amounts ranging from $1,000…
A: The amortization refers to the systematic repayment of loan and interest amount. Repayment is an…
Q: 8. Which of the following is NOT a component of aggregate expenditure? a.Investment b.Consumption…
A: The objective of the question is to identify which among the given options is not a component of…
Q: Use an excel spreedsheet to answer this question: The National Potato Cooperative purchased a…
A: Equivalent Annual Revenues (EAR) is a financial concept used to simplify complex financial…
Q: Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7…
A: YearCash flows Present value @7%Cumulative cash…
Q: Buster's had a beginning cash balance of $2,780 for the quarter. During the quarter, the firm had…
A: First we need to use equation below to calculate short term debt paid off.Short term debt paid off =…
Q: Using duration and convexity approximation, compute the percentage price change on a 10-year fixed…
A: Given:Modified duration (Dmod) = 6 yearsConvexity (C) = 200 year²Change in yield (Δy) = 1%
Q: The common shares of Twitter, Incorporated (TWTR) recently traded on the NYSE for $97 per share. You…
A: “Since you have posted multiple questions with multiple sub parts, we will provide the solution only…
Q: What is the gross income multiplier? Property 1 Property 2 Property 3 Subject 6.54 10.25 8.70 15.15…
A: The Gross Income Multiplier (GIM) is a valuation metric used in real estate to estimate the market…
Q: An analyst gathers the following information for an equal-weighted index comprised of assets Able,…
A: In the given case, we have provided the price of the beginning, end and the total dividends of each…
Q: Consider a bond that pays annually an 8% coupon with 20 years to maturity. The percentage change in…
A: = 8/1.051 + 8/1.052 ------8/1.0519 + 108/1.0520.= $137.3866 Approximately
Q: Suppose you have $200,000 cash today and you can invest it to become worth $2,000,000 in 18 years.…
A: Present value refers to the method of time, the value of money which is the value today of an asset…
Q: Suppose you want to have $ 20,000 saved in 15 years. If you can earn 4.66% on your funds, how much…
A: Present value = Future value / (1+i)^twherePresent value = amount to be invested todayFuture value =…
Q: (Market value analysis) The balance sheet for Larry Underwood Motors shows a book value of…
A: Stock valuation:Investors use stock valuation to make informed investment decisions. If a stock is…
Q: What is the value of stock in a company that currently pays out $1 per share in dividends and…
A: Current dividend per share, D0 = $1Short term growth rate, gs = 50%Long term growth rate, gl =…
Q: 6. The firm is currently an all-equity firm with assets worth $120 million and 10 million shares…
A: - Current Assets Value: $120 million- Current Shares Outstanding: 10 million- New Debt: $60 million-…
Q: The next dividend payment by Hoffman, Inc., will be $2.55 per share. The dividends are anticipated…
A:
Q: The GiN Corp. is expected to pay a dividend of $3 which is expected to grow at 2% for a foreseeable…
A: The objective of the question is to calculate the weighted average cost of capital (WACC) for GiN…
Q: The function s(t)= 0.03 +0.003t gives the effective annual rate of a zero coupon bond of maturity t,…
A: Given, s(t) = 0.03 + 0.003 *tSo, for t = 0.5, interest rate = 0.03 + 0.003*0.5 = 3.1%For t= 1,…
Q: Assume that the export price of a Toyota Corolla from Osaka, Japan is ¥ 2,150,000. The exchange rate…
A:
A firm has 750 bonds outstanding that are selling for $989 each, 2,500 shares of
a. 54.00%
b. 55.45%
c. 66.16%
d. 62.08%
e. 47.11%
Step by step
Solved in 3 steps
- Assume Plainfield Manufacturing has debt of $6,500,000 with a cost of capital of 9.5% and equity of $4,500,000 with a cost of capital of 11.5%. What is Tylers weighted average cost of capital?The Tyler Oil Company's capital structure is as follows: Debt Preferred stock Common equity 15% 20 65 The aftertax cost of debt is 5 percent; the cost of preferred stock is 8 percent; and the cost of common equity (in the form of retained earnings) is 11 percent. Calculate Tyler Oil Company's weighted average cost of capital in a manner similar to Table 11-1. (Round the final answers to 2 decimal places.) Debt (Kd) Preferred stock (Kp) Common equity (Ke) (retained earnings) Weighted average cost of capital (Ka) Weighted Cost % 9.50 %a. You are required to calculate the Weighted Average Cost of Capital (WACC) of Sethoo & Sons Limited from the data below: Black Limited Star Limited Number of Ordinary Shares (GHC 1.00) 2,000,000 1,000,000 Net Income available 600,000 250,000 to Ordinary Shares Gross Dividend 500,000 200,000 Market Price per share Market value of Debts 3,000,000 Annual Growth rate 3.00 2.00 1,500,000 1296 10% of Dividend Gross Interest yield 10% 119% NOTE: The corporation tax rate is 506. Debts are currently quoted at GHC 100 per block. b. Explain why the Market Value Approach of calculating WACC is preferred to the Book Value Approach c. What are the uses of Weighted Average Cost of Capital?
- Assume Skyler Industries has debt of $4,775,777with a cost of capital of 7.8% and equity of $5,798,398 with a cost of capital of 9.6%. What is Skyler’s weighted average cost of capital for equity? Round to the nearest hundredth, two decimal places and submit the answer in a percentage.1. You are required to calculate the Weighted Average Cost of Capital (WACC) of Sethoo & Sons Limited from the data below: Black Limited Star Limited Number of Ordinary Shares (GHC 1.00) 2,000,000 1,000,000 Net Income available to Ordinary Shares 600,000 250,000 Gross Dividend 500,000 200,000 Market Price per share 3.00 2.00 Market value of Debts 3,000,000 1,500,000 Annual Growth rate of Dividend 12% 10% Gross Interest yield 10% 11% NOTE: The corporation tax rate is 50%. Debts are currently quoted at GHC 100 per block. 2. Explain why the Market Value Approach of calculating WACC is preferred to the Book Value Approach. 3. What are the uses of Weighted Average Cost of Capital?Company E has 4 million shares of stock outstanding, 1 million shares of preferred stock, and 20,000 bonds. If the common shares sell for $28 per share, the preferred shares sell for $18.50 per share, and the bonds are selling for 97% of par, what would be the weights used in the calculation of Company E’s Weighted Average Cost of Capital (WACC)?
- The company capital structure consists of debt 135000 at 6.05%, common stock 410000 at 10.09% and preferred stock 200000 at 11%, calculate company's weighted average cost of capital Select one: Oa. 8,59% O b.9.09% Oc. 9.59% O d. 7.59% Oe. None of the optionsThe company capital structure consists of debt 250000 at 0.084, preferred stock 230000 at 11% and common stock 120,000 at 14%, calculate a company's weighted average cost of capital Select one: O a. 0.1051 O b. 0.0629 OC 0.0771 d. 0.0349 e. All the given choices are not correctThe following information is available in respect of a firm: Capitalization Rate : 10% Earnings per Share : Rs. 50 Assume rate of return on investments : ja. 12% b. 8% c. 10% Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is : a. 0% b. 20% c. 40% d. 80% e. 100%
- Assume JUP has debt with a book value of $20 million, trading at 120% of par value. The firm has book equity of $26 million, and 2 million shares trading at $19 per share. What weights should JUP use in calculating its WACC? O A. 30.97% for debt, 69.03% for equity O B. 34.84% for debt, 65.16% for equity O C. 38.71% for debt, 61.29% for equity O D. 27.1% for debt, 72.9% for equity5. You are given the following information for company's Financial: Long-term debt outstanding: Current yield to maturity (r debt): Number of shares of common stock: Price per share: Book value per share: Expected rate of return on stock (requity): a) Computed company's cost of capital. Ignore taxes. $300,000 8% 10,000 $50 $25 15%1. You are required to calculate the Weighted Average Cost of Capital (WACC) of Sethoo & Sons Limited from the data below: Black Limited Star Limited Number of Ordinary Shares (GH¢1.00) 2,000,000 1,000,000 Net Income available to Ordinary Shares 600,000 250,000 Gross Dividend 500,000 200,000 Market Price per share 3.00 2.00 Market value of Debts 3,000,000 1,500,000 Annual Growth rate of Dividend 12% 10% Gross Interest yield 10% 11% NOTE: The corporation tax rate is 50%. Debts are currently quoted at GH¢100 per block. 2. Explain why the Market Value Approach of calculating WACC is preferred to the Book Value Approach. 3. What are the uses of Weighted Average Cost of Capital?