Question

How to calculate below. Please explain step by step: Suppose, ABC Company has 2 mln shares...

How to calculate below. Please explain step by step:

Suppose, ABC Company has 2 mln shares outstanding with market value for each share of $22. The firm’s long-term debt is of $56 mln market value with 5.5% interest rate. If the risk free rate is 5%, market premium is 9%, firm’s beta is 0.9 and tax rate is 30% what is the company’s WACC?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

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
ABC Company has 1.4 million shares outstanding and is currently sold at $20 per share. The...
ABC Company has 1.4 million shares outstanding and is currently sold at $20 per share. The company’s debt is currently traded at 93 percent face value, and has a face value of $5 million. The shares are currently priced to yield 11 percent. Government Treasury bills carries a risk-free rate of 8 percent and the market risk premium is 7 percent. With a company beta of 0.74 and a corporate tax rate of 34 percent, what it’s the WACC of...
Suppose that you have following information about the company: - The company has 2 billion shares...
Suppose that you have following information about the company: - The company has 2 billion shares outstanding - The market value of its debt is € 4 billion - The free cash flow to the firm is currently € 1.2 billion - The equity beta is 0.9; the equity (market) risk premium is 7.5%; the risk-free rate is 3.5% - The before-tax cost of debt is 7% - The tax rate is 20% - The company is currently and in...
Q Ltd, an airplane parts manufacturer, currently has $25 million in outstanding debt and has 10...
Q Ltd, an airplane parts manufacturer, currently has $25 million in outstanding debt and has 10 million shares outstanding. The market value per share is $25. The company is currently rated A, its bonds have a yield to maturity of 10%, and the current beta of the stock is 1.06. The risk-free rate is 8% now, and the company’s tax is 40%. The risk premium for the equity is 5.5%. (a) What is the company’s current weighted average cost of...
Suppose that Free People is considering an investment in its online portal. The investment will be...
Suppose that Free People is considering an investment in its online portal. The investment will be evaluated using the firm’s WACC. The firm’s cost of debt is 4.0%, tax rate is 35%, and beta is .91. The risk-free rate is 2.5% and the market risk premium is 5%. The firm’s shares currently sell for $8/share and there are 455 million shares outstanding. The firm has $2.2 billion in debt that currently sells at par value and $2.0 billion in book...
As of November 2019, Qualcomm Inc. had $28 billion in​ debt, 1.21 billion shares outstanding at...
As of November 2019, Qualcomm Inc. had $28 billion in​ debt, 1.21 billion shares outstanding at a price of $83.55 per share, and an equity beta of 1.38 (as reported on​ Yahoo! Finance). Included in​ Qualcomm's assets was $11.8 billion in cash and​ risk-free securities. Assume that the​ risk-free rate of interest is 0.9% and the market risk premium is 3.9%.   What is​ Qualcomm's enterprise​ value?   What is the beta of​ Qualcomm's business​ assets?    What is​ Qualcomm's pre-tax WACC?
Below is the information on ABC company and its tax rate is at 25% . (Yield...
Below is the information on ABC company and its tax rate is at 25% . (Yield to Maturity) 9% (Number Common Stocks 20,000 (Price Per share) $40 (Long-term debt) 400,000 (Book value per share) $30 (Expected Rate of Return on Stock) 16% Required : 1) Find the company cost of capital 2) Subsidiary company to ABC company , i.e. LZT Berhad book value is at RM25 per share and its trading price currently is RM50. The company’s balance sheet is...
The ABC. Inc . has 2.8 million shares of stock outstanding . The stock currently sells...
The ABC. Inc . has 2.8 million shares of stock outstanding . The stock currently sells for $20 per share . The firm debt publicly traded and was recently quoted at 94% of face value . It has a total face value of $ 10 million and it is currently priced to yield 10% .The risk -free rate is 8% and the market risk premium is 7% . You have estimated that the company has a beta of 0.74 ....
Use the following information to calculate the firm’s weighted average cost of capital: The dividend for...
Use the following information to calculate the firm’s weighted average cost of capital: The dividend for preferred shares is $5, and the current price for preferred stock is $75. The rate of return on long-term debt is 6%, the rate of return on short-term debt is 5%, and the marginal tax rate is 35%. The market risk premium is 5%, the risk-free rate is 3%, and the firm has a beta of 0.9. The firm’s capital structure is as follows:...
50 million shares $80 per share Beta = 1.11 Market risk premium = 7% Risk-free rate...
50 million shares $80 per share Beta = 1.11 Market risk premium = 7% Risk-free rate = 2% Debt Information $1 billion in outstanding debt (face value) Current quote = 108 Coupon rate = 9%, semiannual coupons 15 years to maturity Tax rate =35% What is the cost of equity? [K] What is the before-tax cost of debt? [L] What is the WACC?[M]
Company X has 8 million shares of common stock outstanding. The current share price is $57,...
Company X has 8 million shares of common stock outstanding. The current share price is $57, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $70.8 million and a coupon rate of 7 percent and sells for 107 percent of par. The second issue has a face value of $60 million and a coupon rate of 7 percent and sells for 109 percent of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT