Question

If Qual Corp. currently trades at $35/ per share, with 2 million shares outstanding. Their total...

If Qual Corp. currently trades at $35/ per share, with 2 million shares outstanding. Their total debt is 35 million with 15- year maturity, semi-annual bond pricing at $780 now with $1000 par value. The coupon rate is 7%. This company has a Beta of 1.3, risk free rate is 3% and SP 500 index return is 10% now. With a tax rate 40%, please calculate the WACC.

1(a) How much is cost of debt before tax? ( In decimal format)

1(b) how much is cost of equity?(same format)

1(c) What is WACC? (same format)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
There are 2 million common shares of stock outstanding, currently trading for $35 per share. The...
There are 2 million common shares of stock outstanding, currently trading for $35 per share. The most recent dividend paid was $4 per share. Dividends are expected to increase by 2% per year for the foreseeable future. There are 25,000 bonds outstanding with a coupon rate of 5% that mature in eight years. The face value of these bonds is $1000, coupon payments are made annually, and the yield to maturity is 4%. There are 75,000 bonds outstanding with a...
Kido Corp. currently has 35 million common stocks each trading at $24. Moreover, it has 1...
Kido Corp. currently has 35 million common stocks each trading at $24. Moreover, it has 1 million, 2.947% coupon, 10 year bonds ($1000 par) each trading at 84. Interest is paid annually. The management wants to change the firm’s capital structure by either changing the debt-to-equity ratio to: (i) 0.43 by selling more stocks and paying off debt or (ii) 2.33 by issuing more debt and do stock repurchase More Information: Current beta is 1.5 The risk free rate is...
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $84,...
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, has a 7 percent coupon, and sells for 94 percent of par. The second issue has a face value of $35 million, has a 8 percent coupon, and sells for 107 percent of par. The first issue...
Wonderful Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta of...
Wonderful Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta of 2.2. It also has $10 million face value of bonds that have 5 years remaining to maturity and 8% coupon rate with semi-annual payments, and are priced to yield 13.65%. If Wonderful issues up to $2.5 million of new bonds, the bonds will be priced at par and have a yield of 13.65%; if it issues bonds beyond $2.5 million, the expected yield on...
Peace Waterfront Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta...
Peace Waterfront Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta of 2.2. It also has $10 million face value of bonds that have 5 years remaining to maturity and 8% coupon rate with semi-annual payments, and are priced to yield 13.65%. If Peace Waterfront issues up to $2.5 million of new bonds, the bonds will be priced at par and have a yield of 13.65%; if it issues bonds beyond $2.5 million, the expected...
Peace Waterfront Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta...
Peace Waterfront Ltd currently has 1.2 million ordinary shares outstanding and the share has a beta of 2.2. It also has $10 million face value of bonds that have 5 years remaining to maturity and 8% coupon rate with semi-annual payments, and are priced to yield 13.65%. If Peace Waterfront issues up to $2.5 million of new bonds, the bonds will be priced at par and have a yield of 13.65%; if it issues bonds beyond $2.5 million, the expected...
Erna Corp. has 9 million shares of common stock outstanding. The current share price is $88,...
Erna Corp. has 9 million shares of common stock outstanding. The current share price is $88, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $80 million, has a coupon rate of 5 percent, and sells for 98 percent of par. The second issue has a face value of $55 million, has a coupon rate of 6 percent, and sells for 106 percent of...
Target Corp has a current price of $73. It also has 521 million shares outstanding and...
Target Corp has a current price of $73. It also has 521 million shares outstanding and the market value of debt is $11,317 million. The company’s equity beta is 0.72. Its tax rate is 20%. Assume that the risk-free rate is 2.5% and the market return is 10%. The company’s cost of debt is 4.2%.    Compute the weighted average cost of capital (WACC) for Target Corp.If an investment project.generates a return of 10% and has similar risk level as...
Multiplex Entertainment has 9 million shares outstanding, 250,000 shares of 6% preferred stock with a par...
Multiplex Entertainment has 9 million shares outstanding, 250,000 shares of 6% preferred stock with a par value of $100, and 105,000 semi-annual bonds at 7.5% (with par value of $1000 each). Common stock sells at $34/share (beta 1.25), preferred stock at $91/share, and the bonds at 93% of par with 15 years to maturity, the YTM on the bonds is 5.41%. The market risk premium is 8.5%, T-Bills are yielding 5%, and the corporate tax rate is 35%. What is...
Google Currently has 5 million common shares outstanding, and a 1 million preferred shares outstanding, and...
Google Currently has 5 million common shares outstanding, and a 1 million preferred shares outstanding, and 100,000 bonds outstanding. Use your answers in #3, #4, and #5 to calculate Google Weighted Average Cost of Capital (WACC) if the corporate tax rate is 35%.   #3: Average cost of equity is 13.76% #4: Cost of preferred stocks is 6.0% #5: Annual pre-tax debt is 6.85%