Need answer ABC IS AN ALL-EQUITY FIRM THAT HAS43,240 SHARES OF STOCK OUTSTANDING ATA MARKET PRICE OF $15.97 PER SHARE. THEFIRM IS CONSIDERING A CAPITAL STRUCTUREWITH 50% DEBT AT A RATE OF 6% AND USETHE PROCEEDS TO REPURCHASE SHARES.THE SHARES OUTSTANDINGDETERMINEONCE THE DEBT IS ISSUED.

The problem involves the determination of the number of outstanding stocks after reconstruction of…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 17P

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MV Corporation has debt with market value of $100 million, common equity with a book value of $104 million, and preferred stock worth $22 million outstanding. Its common equity trades at $54 per share, and the firm has 6.4 million shares outstanding. What weights should MV Corporation use in its WACC? The debt weight for the WACC calculation is __% ? The preferred stock weight for the WACC calculation is __% ? The common equity weight for the WACC calculation is __% ?
Bella Vista is an all equity firm with 45,000 shares of stock outstanding at a market price of $50 a share. The company's EBIT are $128,000. BV has decided to add leverage to its financial operations by issuing $250,000 of debt at 8 percent interest. The debt will be used to repurchase shares of stock. Find out, a. BV’s EPS with and without debt, b. BV’s value of stock and value of debt after leverage. You own 400 shares of BV’S stock. You can also loan out funds at 8 percent interest rate. How many shares of BV’s stock must you sell to offset the leverage that BV’s is assuming? Assume you loan out all the funds you receive from the sale of stock. Ignore taxes
ABC is an all-equity firm with an estimated market value of $900,000. The firm sells $325,000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.
MV Corporation has debt with market value of $95 million, common equity with a book value of $101 million, and preferred stock worth $22 million outstanding. Its common equity trades at $45 per share, and the firm has 5.6 million shares outstanding. What weights should MV Corporation use in its WACC? The debt weight for the WACC calculation is 25.74% The preferred stock weight for the WACC calculation is 5.96% The common equity weight for the WACC calculation is __ % ? (Round to two decimal places.)
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(b) Karl Corporation is a public listed company. The entity intends to measure its cost of capital. The finance executive has collected the necessary data as follows: Preferred stock features: 500,000 preferred stocks at $8 per share with a flotation cost of 5% per share. The company declared a dividend of $0.60 per share. Common stock features: 900,000 common stocks with a market value of $6.50 per share with a flotation cost of 3% per share. Recently, the company has paid a dividend of $0.50 per share and expects its dividends to grow at 4% indefinitely. Debt features: A bank has lent out a $1,450,000 to the company. Besides, the company issues a $1,000 par value bond with an annual coupon interest rate of 5%. The bond matures in 9 years. The market price of the bond is $1,200 with a flotation cost of 5%. The company's tax rate is 21%. Calculate the Weighted Average Cost of Capital.
MV corporation has debt with market value of $101 million, common equity with a book value of $102 million, preferred stock worth $17 million outstanding. It’s common equity trades at $46 per share, and the firm has 5.6 million shares outstanding. What weights should MV corporation use in its WACC
what's the total share issued and total share outstanding? and what's the answer of question 6?
Please find the below financial information, and calculate the WACC for the ABC Property Development Company; And explain why is useful to calculate the WACC for ABC property company itself from Financial Management perspective? ABC Property Development Company has 9.6 million shares of common stock outstanding, 400,000 shares of 6 percent $100 par value preferred stock outstanding, and 165,000 7.50 percent semi-annual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.30, the preferred stock currently sells for $93 per share, and the bonds have 20 years to maturity and sell for 115 percent of par. The market risk premium is 8.4 percent, T-bills are yielding 4 percent, and the company’s tax rate is 40 percent.
MV Corporation has debt with market value of $99 million, common equity with a book value of $95 million, and preferred stock worth $17 million outstanding. Its common equity trades at $52 per share, and the firm has 5.5 million shares outstanding. What weights should MV Corporation use in its WACC? The debt weight for the WACC calculation is %. (Round to two decimal places.) The preferred stock weight for the WACC calculation is %. (Round to two decimal places.) The common equity weight for the WACC calculation is %. (Round to two decimal places.)
ABC Limited is an all-equity firm and has a present capital structure of 10 million shares ofcommon stock, which trades at $12 per share. The company is contemplating an expansionprogramme that requires a capital cost of $18 million. Two alternative financing plans areunder consideration:Plan 1-(Equity financing). Sale of 1.5 million additional shares of common stock.Plan 2 (Debt financing). Issue $18.0 million in 12% Long-term debt.The firm’s marginal rate of tax is 35 percent.You are required to:a. Determine the break-even EBIT, given the two financing plans. b. Suppose ABC Limited’s EBIT is likely to be $24 million. Which alternative financingplan would you recommend, assuming you want to maximize EPS?

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ABC IS AN ALL-EQUITY FIRM THAT HAS 43,240 SHARES OF STOCK OUTSTANDING AT A MARKET PRICE OF $15.97 PER SHARE. THE FIRM IS CONSIDERING A CAPITAL STRUCTURE WITH 50% DEBT AT A RATE OF 6% AND USE THE PROCEEDS TO REPURCHASE SHARES. THE SHARES OUTSTANDING DETERMINE ONCE THE DEBT IS ISSUED.