Question

Common stock:   1 million shares outstanding, $40 per share, $1 par value, beta = 0.8 Preferred...

Common stock:   1 million shares outstanding, $40 per share, $1 par value, beta = 0.8

Preferred stock:   200,000 shares outstanding, $44 per share, $3.50 per share annual dividend

Debt: 10,000 bonds outstanding, $1,000 face value, 8% coupon, 20 yrs to maturity, price = 112% of par

Other: Market return = 14.6%, risk-free rate = 6%, company tax rate = 28%

What is this company's WACC?

A. 8.67%

B. 10.67%

C. 12.33%

D. 9.50%

E. 7.33%

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
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?...
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...
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...
The Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock...
The Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock that pays an annual dividend of $8.00, and 200,000 - $1000 par value bonds with a 10% coupon. The bonds pay interest semi-annually, and have 20 years to maturity. At present, the common stock is selling for $50 per share, the bonds for $950.62 each, and the preferred stock at $74 per share. The estimated required rate of return on the market is 13%,...
A firm has 12,000 shares of common stock outstanding with a book value of $20 per...
A firm has 12,000 shares of common stock outstanding with a book value of $20 per share and a market value of $39. There are 5,000 shares of preferred stock with a book value of $22 and a market value of $26. There is a $400,000 face value bond issue outstanding that is selling at 87% of par. What weight should be placed on the preferred stock when computing the firm's WACC? Please show all work
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?
) Hankins Corporation has 8 million shares of common stock outstanding, 920,000 shares of preferred stock...
) Hankins Corporation has 8 million shares of common stock outstanding, 920,000 shares of preferred stock outstanding, and 180,000 of 5.5 percent semiannual bonds outstanding, par value $1,000 each. The annual dividend for the preferred stocks is $4.8 per share. The common stock currently sells for $39 per share and has a beta of 1.26, the preferred stock currently sells for $80 per share, and the bonds have 25 years to maturity and sell for 98 percent of par. The...
Western Electric has 25,000 shares of common stock outstanding at a price per share of $65...
Western Electric has 25,000 shares of common stock outstanding at a price per share of $65 and a rate of return of 13.70 percent. The firm has 6,600 shares of 6.40 percent preferred stock outstanding at a price of $88.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $362,000 and currently sells for 104 percent of face. The yield to maturity on the debt is 7.66 percent. What...
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...
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.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT