Please don't use Ai solution Brodsky Metals Corporation has 9.3 million shares of common stock outstanding and 370,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for$41 per share and has a beta of 1.15. The bonds have 20 years to maturity and sell for 112 percent of par. The market risk premium is 8.1 percent, T-bills are yielding 4 percent, and the company's taxrate is 23 percent. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do notround intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

The problem involves the determination of the discount rate which is the Weighted Average Cost of…

Answered: Brodsky Metals Corporation has 9.3…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Brodsky Metals Corporation has 8.9 million shares of common stock outstanding and 330,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $37 per share and has a beta of 1.45. The bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 4 percent, and the company's tax rate is 24 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. Debt Equity b. Discount rate %
Titan Corporation has 8.9 million shares of common stock outstanding and 330,000 5.3 percent semiannual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $37 per share and has a beta of 1.15; the bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 4 percent, and the company's tax rate is 24 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Debt a. Equity b. Discount rate % 96
Titan Corporation has 9.6 million shares of common stock outstanding and 400,000 5.7 percent semiannual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.2; 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 21 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 460,000,000.0000 > 422,400,000.0000 > a. Debt a. Equity b. Discount rate 8.66 %
Manshukh
Yogesh
The total book value of WTC's equity is $13 million, and book value per share is $26. The stock has a market-to-book ratio of 1.5, and the cost of equity is 15%. The firm's bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 10%, and the firm's tax rate is 21%. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Manshuk
Ma, Inc. has a market value capital structure of 30% debt and 70% equity. The tax rate is 30%. Thefirm’s bonds currently trade in the market for $1035.00. These bonds have a face value of $1,000,coupon rate of 8% paid semiannually, and 10 years remaining to maturity. The firm’s common stocktrades for $20 per share. The firm has just paid a dividend of $2. Future dividends are expected to growat 2% per year. Based on this information, Ma, Inc.’s WACC is _____%. Cream and Crimson has a capital structure of 60% debt and 40% equity. The tax rate is 34%. The firm’sbonds currently trade in the market for $784. These face value $1,000 bonds have a coupon rate of 8%,paid semiannually, with 7 years to maturity. The firm’s common stock trades for $15 per share and thecompany’s beta is 1.28. The risk-free rate (Rf) = 3.2% and the market risk premium (Rm – Rf) = 8.1%.Given this information, Cream and Crimson’s WACC is _____%.
The total book value of WTC's equity is $12 million, and book value per share is $24. The stock has a market-to-book ratio of 1.5, and the cost of equity is 14%. The firm's bonds have a face value of $8 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 9%, and the firm's tax rate is 21%. What is the company's WACC? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. WACC %
Titan Mining Corporation has 9 million shares of common share outstanding and 120,000 semiannual bonds outstanding, par value $1,000 each. The coupon rate on bonds is 6%. The common stock currently sells for $34 per share and has a beta of 1.20, and the bonds have 30 years to maturity and sell for 93% of par. The market risk premium is 10%, T-Bills are yielding 5%, and Titan Miningâ€™s tax rate is 35%. a. What are the weights based on market values?b. Compute the WACC?
The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)
Kosmo, Inc. has a market value capital structure of 25% debt and 75% equity. The tax rate is 40%. The firm's bonds currently trade in the market for $930. These bonds have a face value of $1,000, coupon rate of 8% paid semiannually, and 10 years remaining to maturity. The firm's common stock trades for $15 per share. The firm has just paid a dividend of $2.00 (i.e., DO = 2.00). Future dividends are expected to %. grow at 3% per year. Based on this information, Ma, Inc.'s WACC is O 1) 13.26 O2) 11.94 3) 12.17 4) 13.91 5) 10.98

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS