Need answer please not use ai please don't ABC is an all-equity firm that has 43,240shares of stock outstanding at a market priceof $15.97 per share. The firm is consideringa capital structure with 50% debt at a rate of6% and use the proceeds to repurchaseshares. Determine the shares outstandingonce the debt is issued.

Step 1: Determine the Total Value of the FirmSince ABC is an all-equity firm, its entire value comes…

Answered: ABC is an all-equity firm that has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.
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Flaherty Electric has a capital structure that consists of 70 percent equity and 30 percent debt. The company’s long-term bonds have a before-tax yield to maturity of 8.4 percent. The company uses the DCF approach to determine the cost of equity. Flaherty’s common stock currently trades at RM40.50 per share. The year-end dividend (D1) is expected to be RM2.50 per share, and the dividend is expected to grow forever at a constant rate of 7 percent a year. The company estimates that it will have to issue new common stock to help fund this year’s projects. The company’s tax rate is 40 percent. What is the company’s weighted average cost of capital, WACC?
Huntington Power Co. has issued following three securities as its long-term source of capital. Calculate the weights of each source of capital (kd, kp, ke). Debt: 2,500 bonds outstanding, current market price of the bond is $1,080. Preferred Stock: 3,000 shares outstanding, selling for $98. Common Stock: 60,000 shares outstanding, selling for $55 per share. a. 42.90%; 4.67%; 52.43% b. 45.63%; 1.72%; 59.67% c. 42.90%; 4.67%; 55.71% d. 59.67%; 5.08%; 35.24% e. 45.63%; 1.72%; 52.65% f. 42.90%; 2.23%; 52.14%
ou have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 45.00% debt and the remaining is common equity. XYZ's bonds have a yield of 8.00%. The corporation paid dividend of $0.61 and the future dividends are expected to grow at a constant rate of 6.00%. The current market price per share of common stock is $17.50. The flotation costs are 10.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the corporation is to finance its investments through a new stock issue.
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 __% ?
Creation Landscaping has 1,000 bonds outstanding that are selling for $1,280 each. The company also has 2,000 shares of preferred stock outstanding, currently priced at $27.20 a share. The common stock is priced at $37.00 a share and there are 28,000 shares outstanding. What is the weight of the debt as it relates to the firm's weighted average cost of capital? Group of answer choices 43.08 percent 45.16 percent 47.11 percent 54.00 percent 55.45 percent
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.)
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 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.
Suppose that Papa Bell, Inc.’s equity is currently selling for $50 per share, with 3.5 million shares outstanding. Assume the firm also has 12,000 bonds outstanding, and they are selling at 94 percent of par.What are the firm’s current capital structure weights? Capital Structure Weights Equity % Debt %
Assume JUP has debt with a book value of $24 million, trading at 120% of par value. The firm has book equity of $28 million, and 2 million shares trading at $20 per share. What weights should JUP use in calculating its WACC? A) 41.86% for debt, 58.14% for equity B) 37.67% for debt, 62.33% for equity C) 33.49% for debt, 66.51% for equity D) 29.30% for debt, 70.70% for equity

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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. Determine the shares outstanding once the debt is issued.