Question 5 Complete Marked out of 5.00 Flag question Amazon Corporation has 10 million shares of common stock outstanding, 270,000 shares of 4% $100 par value preferred stock outstanding, and 149,000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $94 per share and has a beta of 1.40, the preferred stock currently sells for $92 per share, and the bonds have 10 years to maturity and sell for 125% of par. The market risk premium is 9.6%, T-bills are yielding 5%, and Amazon's Corporate tax is 38%. a) What is the firms market value of Capital? (2Marks) b) Calculate WACC (Weighted Average Cost of Capital)? (3Marks)

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Amazon Corporation has 10 million shares of common stock outstanding, 270,000 shares of 4% $100 par value preferred stock outstanding, and 149,000 7.50%
semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $94 per share and has a beta of 1.40, the preferred stock currently
sells for $92 per share, and the bonds have 10 years to maturity and sell for 125% of par. The market risk premium is 9.6%, T-bills are yielding 5%, and Amazon's
Corporate tax is 38%.
a) What is the firms market value of Capital? (2Marks)
b) Calculate WACC (Weighted Average Cost of Capital)? (3Marks)
Transcribed Image Text:Question 5 Complete Marked out of 5.00 Flag question Amazon Corporation has 10 million shares of common stock outstanding, 270,000 shares of 4% $100 par value preferred stock outstanding, and 149,000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $94 per share and has a beta of 1.40, the preferred stock currently sells for $92 per share, and the bonds have 10 years to maturity and sell for 125% of par. The market risk premium is 9.6%, T-bills are yielding 5%, and Amazon's Corporate tax is 38%. a) What is the firms market value of Capital? (2Marks) b) Calculate WACC (Weighted Average Cost of Capital)? (3Marks)
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