Question

Sound & Vision Studios (SVS) has 5 million common shares outstanding which sell for $30 per...

Sound & Vision Studios (SVS) has 5 million common shares outstanding which sell for $30 per share. SVS just paid a dividend $2.50 per share, and investors and analysts expect all future dividends to grow by 5% per year, indefinitely. The current risk-free rate is 2.50%, the expected return on the market is 10%, and the stock has a beta of 2.2. SVS also has 1 million shares of 7% preferred stock outstanding (par value of $100) selling for $35 per share and 200,000 30-year, 9% annual coupon bonds outstanding, currently selling for 115% of par. If SVS is in the 35% tax bracket, then what is the firm’s WACC

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose a company has 5 million common shares outstanding, which have a market value of $24...
Suppose a company has 5 million common shares outstanding, which have a market value of $24 per share. The most recent annual dividend paid was $2.25/share. The expectation is for an 8 percent constant growth of the firm’s earnings & dividends. The 3-year average yield on 10-year T-Bonds is 5.50%, the expected return on a broad index of common stocks is 11% and the stock is twice as variable as the market average. The capital structure includes also 150,000 15-year...
Team Sports has 10 million shares of common stock outstanding, 2 million shares of preferred stock...
Team Sports has 10 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 200 thousand bonds ($1,000 par). The common shares are selling for $40.00 per share, the preferred share are selling for $20 per share, and the bonds are selling at par. a.    What would be the weight used for common stock in the computation of Team's WACC? b.    What would be the weight used for preferred stock in the computation of Team's WACC?...
Tom and Jerry's has 2.4 million shares of common stock outstanding, 2.4 million shares of preferred...
Tom and Jerry's has 2.4 million shares of common stock outstanding, 2.4 million shares of preferred stock outstanding, and 14.00 thousand bonds. If the common shares are selling for $13.40 per share, the preferred share are selling for $10.40 per share, and the bonds are selling for 99.96 percent of par, what would be the weight used for equity in the computation of Tom and Jerry's WACC?
OMG Inc. has 4 million shares of common stock outstanding. 3 million shares of preferred stock...
OMG Inc. has 4 million shares of common stock outstanding. 3 million shares of preferred stock outstanding, and 5,000 bonds. If the common shares are selling for $17 per share, the preffered shares are selling for $26 per share, and the bonds are selling for 108% of par, what would be the weight used for aquity in the computation of OMG's WACC? Show formulation with numbers used in excel computation.
Nike has 9 million shares of common stock outstanding and 12,000 8.5% semiannual bonds outstanding, par...
Nike has 9 million shares of common stock outstanding and 12,000 8.5% semiannual bonds outstanding, par value of $10,000 each. Common stock currently sells for $34 per share and has a beta of 1.20. The bonds have 15 years to maturity and sell for 93% of par. The market risk premium is 10%, Tbills are yielding 5% and the firm’s tax rate is 35%. Find Nike’s weighted average cost of capital (WACC).
Acme Inc. currently has 500,000 common shares outstanding that are currently trading at $35 per share....
Acme Inc. currently has 500,000 common shares outstanding that are currently trading at $35 per share. When the shares were originally issued one year ago, their price was $20. The Beta of the company is 1.1 and the market risk premium is 4.5%. The company also has 250,000 shares of preferred stock outstanding for which it pays an annual dividend of $2.50 per share. These preferred shares currently trade at $60 per share. Acme has also just issued 1,500 bonds...
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1...
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $26 per share, the preferred shares are selling for $14.00 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.)   Weight used %
1. Organic Produce Corporation has 7.5 million shares of common stock outstanding, 500,000 shares of 7%...
1. Organic Produce Corporation has 7.5 million shares of common stock outstanding, 500,000 shares of 7% preferred stock outstanding, and 175,000 of 8.2% semiannual bonds outstanding, par value of $1,000 each. The common stock currently sells for $64 per share and has a beta of 1.2, the preferred stock currently sells for $108 per share, and the bonds have 15 years to maturity and sell for 96% of par. The market risk premium is 6.8%, T-Bills are yielding 5.5%, and...
Organic Produce Corporation has 7.5 million shares of common stock outstanding, 500,000 shares of 7% preferred...
Organic Produce Corporation has 7.5 million shares of common stock outstanding, 500,000 shares of 7% preferred stock outstanding, and 175,000 of 8.2% semiannual bonds outstanding, par value of $1,000 each. The common stock currently sells for $64 per share and has a beta of 1.2, the preferred stock currently sells for $108 per share, and the bonds have 15 years to maturity and sell for 96% of par. The market risk premium is 6.8%, T-Bills are yielding 5.5%, and the...
Advance Manufacturing has 8.2 million shares of common stock outstanding. The current share price is $50,...
Advance Manufacturing has 8.2 million shares of common stock outstanding. The current share price is $50, and the book value per share is $8. The company has 200,000 9% coupon bonds outstanding, $1,000 par value, 15 years to maturity, currently selling for 97% of par, and the bonds make annual payments. Suppose the company’s stock has a beta of 1.3. The risk free rate is 3.5%, and the market risk premium is 7%. The company’s tax rate is 35%. Please...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT