Question

The BHP Corporation has debt with a market value of $55 million, preferred stock worth $3 million outstanding, and common equity with a market value of $42 million. The company’s debt yields 9.5 percent. Its preferred stock pays $6.5 per share fixed dividend and is currently priced at $50 per share. The company’s common stock has a beta of 0.90, the risk-free rate is 4 percent and the market risk premium is 8 percent. Given that BHP Corporation faces 30 percent tax, calculate the company’s weighted average cost of capital (WACC)

Answer #1

MV Corporation has debt with market value of $ 103 ?million,
common equity with a book value of $ 105 ?million, and preferred
stock worth $ 18 million outstanding. Its common equity trades at $
46 per? share, and the firm has 5.5 million shares outstanding.
What weights should MV Corporation use in its? WACC?
The debt weight for the WACC calculation is ?%. ?(Round to two
decimal? places.)
The preferred stock weight for the WACC calculation is %. (Round...

MV Corporation has debt with market value of $ 100 million,
common equity with a book value of $ 104 million, and preferred
stock worth $ 22 million outstanding. Its common equity trades at $
53 per share, and the firm has 5.9 million shares outstanding.
What weights should MV Corporation use in its WACC? The debt
weight for the WACC calculation is nothing%. (Round to two
decimal places.

MV Corporation has debt with market value of $ 100 million,
common equity with a book value of $ 98 million, and preferred
stock worth $ 20 million outstanding. Its common equity trades at $
45 per share, and the firm has 5.9 million shares outstanding.
What weights should MV Corporation use in its WACC? The debt
weight for the WACC calculation is nothing%. (Round to two
decimal places.)

Consider the following capital structure for AAA Corporation.
The company has one debt issue, preferred stock and common stock in
its capital structure. The firm’s tax rate is 40%; the risk-free
rate is 3%.
Details on the components of the capital structure are listed
below.
Bond issue:
Preferred equity:
Common equity:
Coupon-paying issue
$100 million par
10% semiannual coupon
Remaining maturity of 15 years
Currently priced in market at 90% of par value
Coupon-paying issue
$50 million par
6% annual...

A company has $400 million worth of debt outstanding with an
average interest rate of 5% and 50 million common shares
outstanding worth $12 each. The company’s tax rate is 20%, beta is
1.2, the yield on 10-year Treasury notes is 1.5% and the expected
market return is 9.5%. What is the company’s weighted average cost
of capital (WACC) based on the current weights for debt and common
stock in its capital structure?

A company has $400 million worth of debt outstanding with an
average interest rate of 5% and 50 million common shares
outstanding worth $12 each. The company’s tax rate is 20%, beta is
1.3, the yield on 10-year Treasury notes is 1.5% and the expected
market return is 9.5%. What is the company’s weighted average cost
of capital (WACC) based on the current weights for debt and common
stock in its capital structure?

A company has $400 million worth of debt outstanding with an
average interest rate of 5% and 50 million common shares
outstanding worth $12 each. The company’s tax rate is 20%, beta is
1.3, the yield on 10-year Treasury notes is 1.5% and the expected
market return is 9.5%. What is the company’s weighted average cost
of capital (WACC) based on the current weights for debt and common
stock in its capital structure?

The Integrated Products Co. currently has debt with a market
value of $280 million outstanding. The debt consists of 9 percent
coupon bonds (paying semi-annually) that have a maturity of 15
years and are currently priced at $1440.03 per bond. The firm also
has 12 million shares of common stock outstanding currently priced
at $32.11 per share. The stock’s beta is 1.22, the market risk
premium is 12.4% and T-bills yield 2.4%. If the company is subject
to a 30%...

13. A company has $400 million worth of debt outstanding with an
average interest rate of 5% and 50 million common shares
outstanding worth $12 each. The company’s tax rate is 28%, beta is
1.2, the yield on 10-year Treasury notes is 1.5% and the expected
market return is 9.5%. What is the company’s weighted average cost
of capital (WACC) based on the current weights for debt and common
stock in its capital structure?
Need help. Any help would be...

XYZ Industries has 6.5 million shares of common stock
outstanding with a market price of $14 per share. The company also
has outstanding preferred stock with a market value of $10 million,
and 25,000 bonds outstanding, each with face value $1,000 and
selling at 90% of par value. The cost of equity is 14%, the cost of
preferred is 10%, and the cost of debt is 7.25%. If XYZ's tax rate
is 34%, what is the WACC? A) 9.5% B)...

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