Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and the market risk-free rate is 4 percent and the expected return on the market is 9 percent. In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5 million shares of common stock outstanding with a current market price of $98.00 per share. Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, eg. 15.1253 and round final answer to 2 decimal places, e.g. 15.25%) WACC %
Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and the market risk-free rate is 4 percent and the expected return on the market is 9 percent. In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5 million shares of common stock outstanding with a current market price of $98.00 per share. Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, eg. 15.1253 and round final answer to 2 decimal places, e.g. 15.25%) WACC %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
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Transcribed Image Text:Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest
semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and
the market risk-free rate is 4 percent and the expected return on the market is 9 percent.
In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share
and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5
million shares of common stock outstanding with a current market price of $98.00 per share.
Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, e.g. 15.1253 and round final answer to
2 decimal places, e.g. 15.25%)
WACC
Transcribed Image Text:please, i need help. i put these two
answers but they are wrong. 8.95 %
and 8.56% are both wrong. im on my
last attempt.
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