Company A wants to calculate its WACC. It has just issued a 6- year, 9% coupon, non-callable bond at par value. A's current stock price is $16 and A just paid s $2.3 per share dividend. A's dividend payment is expected to grow at a constant rate of 4% a year. A wants to keep a debt-to - capital ratio of 20 %. Tax rate is 30%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC

Company A wants to calculate its WACC. It has just issued a 6- year, 9% coupon, non-callable bond at par value. A's current stock price is $16 and A just paid s $2.3 per share dividend. A's dividend payment is expected to grow at a constant rate of 4% a year. A wants to keep a debt-to - capital ratio of 20 %. Tax rate is 30%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC

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

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Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%, semi-annual coupon payments, and a market price of 96.5% of par value. If the tax rate is 16%, what is the firm's after-tax cost of debt? Enter your answer as an annualized rate in decimal format, and show four decimal places. For example, if your answer is 5.1%, enter .0510.
Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 9.5 percent coupon, paid semiannually, a current maturity of 20 years, and sell for the par value, $1,000. The firm's marginal tax rate is 30 percent.What is Rollins' component after-tax cost of debt? Express your answer in percentage (without the % sign) and round it to two decimal places
ojo Mining has a bond outstanding that sells for $2,084 and matures in 22 years. The bond pays semiannual coupons and has a coupon rate of 6.34 percent. The par value is $2,000. If the company's tax rate is 21 percent, what is the aftertax cost of debt? Please avoid answers in image thank you
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $925. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? Select one: a. 3.74% b. 4.45% c. 5.29% d. 6.78% . Please show how you got your answer. Thank you
Lululemon needs to raise $115 million and wants to issue 20-year zero-coupon bonds for this purpose. Assume the required return on the bond issue will be 5.4% The tax rate is 22%. The par value of each bond is $1000. How many bonds would the company need to issue to raise the money it requires?
Dont do handwritten please!! You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 25 percent. Debt: 9,000 6.4 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 360,000 shares outstanding, selling for $54 per share; the beta is 1.10. Market: 11 percent market risk premium and 4.4 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.).
K Avicorp has a $11.5 million debt issue outstanding, with a 5.8% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 93.67% of par value a. What is Avicorp's pretax cost of debt? b. If Avicorp faces a 28% tax rate, what is its after-tax cost of debt? Note Assume that the firm will always be able to utilize its full interest tax shield. BECER a. The cost of debt is % per year. (Round to two decimal places)
Company A wants to calculate its WACC. It has just issued a 18-year, 8% coupon, non-callable bond at par value. A's current stock price is $21 and A just paid s $0.6 per share dividend. A's dividend payment is expected to grow at a constant rate of 7% a year. A wants to keep a debt-to-capital ratio of 60%. Tax rate is 25%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)?
This question is not incomplete. you need to calculate the cost of equity. I need Answer for the question number d and e. thanks Blooming Ltd. currently has the following capital structure:Debt: $2,500,000 par value of outstanding bond that pays annually 12% coupon rate with an annual before-tax yield to maturity of 10%. The bond issue has face value of $1,000 and will mature in 25 years.Ordinary shares: 65,000 outstanding ordinary shares. The firm plans to pay a $7.50 dividend per share in the next financial year. The firm is maintaining 3% annual growth rate in dividend, which is expected to continue indefinitely.Preferred shares: 40 000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 14%.Company tax rate is 30% Required: Complete the following tasks:a) Calculate the current price of the corporate bond? b) Calculate the current price of the ordinary share if the average return of the shares in the same industry is 9%? c) Calculate the current value…
The firm can raise an unlimited amount of debt by selling R1,000 par value, 8% coupon interest rate, 20 year bonds on which annual interest payments will be made. To sell the issue, an average discount of R50 per bond would have to be given. The firm also must pay flotation costs of R50 per bond. Firm is in 40% tax bracket. Determine after tax cost of debt. A. 5.86% B. 5.48% C. 5.46% D. 5.55%
PDQ, Inc. expects EBIT to be approximately $12.2 million per year for the foreseeable future, and it has 100,000 20-year, 6 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)
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