Nelson's Landscaping has 1,200 bonds outstanding that are selling for $990 each. The company also has 2,500 shares of preferred stock (par = $25) at a market price of $28 a share. The common stock is priced at $37 a share and there are 28,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital (WACC)? 43.08 percent 45.16 percent 47.11 percent 54.00 percent 55.45 percent

Nelson's Landscaping has 1,200 bonds outstanding that are selling for $990 each. The company also has 2,500 shares of preferred stock (par = $25) at a market price of $28 a share. The common stock is priced at $37 a share and there are 28,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital (WACC)? 43.08 percent 45.16 percent 47.11 percent 54.00 percent 55.45 percent

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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OMG Inc. has 4 million shares of common stock outstanding, 3 million shares of preferred stock outstanding, and 5,000 bonds. Suppose the common shares sell for $17 per share, the preferred shares sell for $16 per share, and the bonds sell for 108 percent of par. What weight should you use for preferred stock in the computation of OMG's WACC? (Round your answer to 2 decimal places.) Weight used %
Online Network Inc. has a net income of $700,000 in the current fiscal year. There are 100,000 shares of common stock outstanding, along with convertible bonds, which have a total face value of $1.5 million. The $1.5 million is represented by 1,500 different $1,000 bonds. Each $1,000 bond pays 6 percent interest. The conversion ratio is 10. The firm is in a 20 percent tax bracket. a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Basic earnings per share C b. Compute diluted earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) 200 Diluted earnings per share
Mitchell Co. has $1.1 million of debt, $2 million of preferred stock, and $1.8 million of common equity. What would be its weight on preferred stock?
FarCry Industries, a maker of telecommunications equipment, has 5 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 20,000 bonds. Suppose the common shares are selling for $25 per share, the preferred shares are selling for $13.50 per share, and the bonds are selling for 97 percent of par.What would be the weight used for equity in the computation of FarCry’s WACC? (Round your answer to 2 decimal places.)
Wayco Industrial Supply has a pretax cost of debt of 7.6%, a cost of equity of 16.8%, and a cost of preferred stock of 9.1%. The firm has 220,000 shares of common stock outstanding at a market price of $27 a share. There are 25,000 shares of preferred stock outstanding at a market price of $41 a share. The bond issue has a face value of $550,000 and a market quote of 101.2. The company's tax rate is 34%. What is the firm's weighted average cost of capital?
Bill's Boards has 6.3 million shares of common stock outstanding, 5.3 million shares of preferred stock outstanding, and 33.00 thousand bonds. If the common shares are selling for $29.40 per share, the preferred share are selling for $18.30 per share, and the bonds are selling for 95.87 percent of par, what would be the weight used for common stock in the computation of Bill's WACC? 33.33% 66.67% 54.16% 59.02%
Western Electric has 21,000 shares of common stock outstanding at a price per share of $61 and a rate of return of 15.6 percent. The firm has 11,000 shares of $8 preferred stock outstanding at a price of $48 a share. The outstanding debt has a total face value of $275,000 and currently sells for 104 percent of face. The yield to maturity on the debt is 8.81 percent. What is the firm's weighted average cost of capital if the tax rate is 35 percent? a. 14.52 percent b. 13.92 percent c. 13.44 percent d. 14.37 percent e. 14.19 percent
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,0000 bonds. Suppose the common shares are selling for $27 per share, the preferred shares are selling for $14.50 per share, and the bonds are selling for 98 percent of par. What would be the weight used for equity in the computation of FarCry's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)
Umbrella Corp.'s common stock currently is selling at $23 per share. There are 180,000\\noutstanding shares of common stock. Umbrella Corp also has 50,000 outstanding preferred\\nshares that are currently selling at $35 per share. Umbrella Corp also has issued 5,000 bonds\\nwhich are each currently selling at $968. The cost of capital for Umbrella Corp. is 13% for its\\ncommon stock, 10% for its preferred shares, and 8% for its bonds. Given it has a tax rate of 30%, \ \nwhat is Umbrella Corp.'s adjusted weighted-average cost of capital?
2. Book Co. has 1.5 million shares of common equity with a par (book) value of $1.15, retained earnings of $29.9 million, and its shares have a market value of $50.88 per share. It also has debt with a par value of $18.2 million that is trading at 102% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? **round to two decimal places**
A firm has 12,000 shares of common stock outstanding with a market value of $41 per share. There are 5,000 shares of preferred stock with a market value of $25. There is a $400,000 face value bond issue outstanding that is selling at 88% of par. What weight should be placed on the preferred stock when computing the firm's WACC?
Mitsu Corporation has 100,000 shares of common stock outstanding. The stock currently sells for $50 per share and has a beta of 1.8. The firm has $4 million debt outstanding. The cost of debt before tax is 6.5%. The market risk premium is 7%. T- bills are yielding 4%. Tax rate is 35%. What is the weighted average cost of capital (WACC) of the firm? A) 9.07% O B) 11.10% C) 9.93% D) 11.50% E) 10.36%

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