Time Warner shares have market capitalization of $55 billion. The company just paid a dividend of $0.30 per share and each share trades for $45. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 9%. If the firms tax rate is 40%, compute the WACC? A. 7.22% B. 8.3% C. 7.94% D. 6.86%

Time Warner shares have market capitalization of $55 billion. The company just paid a dividend of $0.30 per share and each share trades for $45. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 9%. If the firms tax rate is 40%, compute the WACC? A. 7.22% B. 8.3% C. 7.94% D. 6.86%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 28P

See similar textbooks

Similar questions

Time Warner shares have a market capitalization of $65 billion. The company just paid a dividend of $0.30 per share and each share trades for $35. The growth rate in dividends is expected to be 8% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 25%, compute the WACC? O A. 7.82% O B. 8.24% OC. 9.06% O D. 9.47%
Time Warner shares have a market capitalization of $70 billion. The company is expected to pay a dividend of $0.35. per share and each share trades for $20. The growth rate in dividends is expected to be 8% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 25%, compute the WACC? O A. 9.09% B. 7.72% C. 8.63% OD. 8.18%
Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity?O A. 5.36% B. 10.18% . 11.22% D. 10.44 % 0 E 10.71%
Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity? O A. O B. 10.44% O D. 11.22% O C. 10.71% 10.18% OE. 5.36% 7
Assume Time Warner shares have a market capitalization of $70 billion. The company is expected to pay a dividend of $0.35 per share and each share trades for $20. The growth rate in dividends is expected to be 9% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 25%, compute the WACC? OA) 8.31% B) 9.29% C) 8.80% D) 9.78%
Time Warner shares have a market capitalization of $55 billion. The company just paid a dividend of $0.35 per share and each share trades for $35. The growth rate in dividends is expected to be 6.5% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 30%, compute the WACC?
Suppose that the market value of a company’s 5.000.000 outstanding number of shares is estimated at £500 mn. The market value of its interest-bearing debt is estimated at £400 mn and the average before-tax yield on these liabilities is 10% per year. Tax rate is assumed to be 25%. Assume that the stock of the company is currently paying a dividend of £10 per year. The dividend growth rate is projected to be 10% per year. Please find the weighted average cost of capital for the company?
The common stock for the Kingsford Corporation sells for $58 a share. last year the firm paid a dividend of $ 4 which is expected to grow 4% per year into the indefinite future. If the firm's tax rate is 22% what is the firm's cost of common equity? a. 17.11% b. 22% c. 11.17% d. 4.17%
Assume Verizon shares have a market capitalization of $50 billion. The company is expected to pay a dividend of $1.25 per share and each share trades for $40. The growth rate in dividends is expected to be 6% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 40%, what is the after-tax WACC?
A firm just paid a dividend of $3.15. The company dividends are predicted to rise by 4.50% per year forever, and the required rate of return on a similar business is 9%. What is the fair market share price of this firm? a. $70.00 b. $76.83 c. $73.15 d. $80.59 e. $76.70
Company Z is expected to pay a dividend at year end of D1 = $1.50. This dividend is expected to grow at a constant rate of 4.00% per year, and the common stock is currently valued at $40.00 per share. The before-tax cost of debt is 5.00%, and the tax rate is 25%. The target capital structure consists of 40% debt and 60% common equity. What is the company's WACC? Group of answer choices 6.65% 5.15% 6.15% 7.07% 3.75%
The Inc. is expected to pay a $2.50 dividend at year end (so D1 = $2.50). The dividend’s growth rate = 5.50% per year. The current stock price = $52.50 per share. The before-tax cost of debt is 7.50%. The tax rate = 40%. The target capital structure is 45% debt and 55% common equity. How much is the Inc’s? 7.07% 7.36% 7.67% 7.98%