Question

You have been given the task of calculating the WACC of ABC Inc. You will use the following information to calculate the WACC.

The firm has 3000 coupon paying bonds outstanding. Each coupon-paying bond has a face value of $1000, will mature 10 years from today, and is currently priced at 130% of the face value. The annual coupon rate is 12%, and coupon is paid on an annual basis.

The company has 500,000 common shares outstanding, and each share is currently trading at $12. You have decided to use CAPM to calculate the cost of equity. The risk-free rate is 5%, and the market risk premium is 5%. The equity beta of the company is 2.

Also, the company has 200,000 preferred shares. Each share is
trading at $10, and the constant yearly preferred dividend per
share is $1.2. Finally, the company faces a tax rate of 30%.
**(Please show your work)**

Answer #1

You have been given the task of calculating the WACC of ABC Inc.
You will use the following information to calculate the WACC. The
firm has 3000 coupon paying bonds outstanding. Each coupon-paying
bond has a face value of $1000, will mature 10 years from today,
and is currently priced at 130% of the face value. The annual
coupon rate is 12%, and coupon is paid on an annual basis. The
company has 500,000 common shares outstanding, and each share...

You have been given the task of calculating the WACC of ABC Inc.
You will use the following information to calculate the WACC.
The firm has 3000 coupon paying bonds outstanding. Each
coupon-paying bond has a face value of $1000, will mature 10 years
from today, and is currently priced at 130% of the face value. The
annual coupon rate is 12%, and coupon is paid on an annual
basis.
The company has 500,000 common shares outstanding, and each
share...

What is ABC Inc.'s effective annual WACC given the following
information? ABC has no outstanding preferred stock ABC does not
pay any dividends ABC has one issue of 10,000 bonds outstanding,
each priced at $667.15. The bonds have a face value of $1000, pay
semi-annual coupons at a rate of 9% APR compounded semi-annually,
and mature in 15 years. The next coupon payment is 6-months from
today. ABC has 1,000,000 common stock shares outstanding, each
priced at $16 per share....

Calculating
WACC
Given the following information for Cleen Power Co., find the
WACC. Assume the company's tax rate is
35%
Debt: 7,000 6% coupon bonds outstanding, $1,000 par value, 20
years to maturity, selling for 105% pf par; the bonds make
semiannual
payments
Common Stock: 180,000 shares outstanding, selling for $58 per
share; the beta is
1.10
Market: 6.5% market risk premium and 4.3% risk-free rate.
Required:
1. Find the market value...

Estimating WACC
Dilworth Corp’s balance sheet reflects long-term debt amounting
to $800 million. This debt consists of 7% coupon bonds that have 15
years remaining until maturity. The bonds are currently trading for
$920 per $1000 face value. The company also has preferred stock
outstanding that makes a fixed quarterly dividend payment of $3.50
in perpetuity. The book value of this preferred stock is $180
million, and the par value of each share is $100. Each share of
preferred is...

uppose you are given the following information for the Legends
of Clash Co.
Debt: 18,000 bonds outstanding, with a face
value of $1,000. The bonds currently trade at 112.5% of par value,
and have 15 years to maturity. The coupon rate equals 4%, and the
bonds make semi-annual coupon payments.
Common stock: 925,000 shares of common stock
outstanding; currently trading for $56 per share. Beta equals
1.45.
Preferred stock: 150,000 shares of preferred
stock outstanding; currently trading for $97.5 per...

Gold Diggers, Inc. has $400,000 shares of common stock currently
trading at $45/share. The common stock of Gold Diggers, Inc is
expected to pay a dividend of $2/share next year, and it has a beta
calculated at 0.90. It also has 200,000 shares of preferred stock,
trading at $50/share. The preferred stock pays dividends of 6%.
Finally, Gold Diggers, Inc has 35,0000 bonds currently trading at
$910/bond. The coupon rate is 7.5% and the bonds will mature in 12
years....

Ms. R. Pavone, the financial manager at Carelli Corporation(CC),
is planning to estimate the WACC for the company. The company
currently has 20-year annual bonds outstanding. The bonds have an
8.5 percent annual coupon, a face value of $1,000, and they
currently sell for $945. The company’s beta is 1.20, the return on
market portfolio is 11 percent, and risk-free rate is 6 percent.
The company has outstanding preferred stock that pays a $2.00
annual dividend. The preferred stock sells...

You have been hired as a consultant by Aerospace Exploration,
Inc. (AEI). AEI is publically traded
company and a leader in space travel. The company is
looking to setup an outpost on the moon, where visitors can
experience space living over a 2 week visit (including travel
time). AEI owns land which has a book value of
$7.3 million and a market value of $7.5 million. The
following market data is available:
Debt: 260,000; 6.1% semi-annual coupon bonds outstanding with...

Problem 12-18 Calculating the WACC [LO 3]
You are given the following information concerning Parrothead
Enterprises:
Debt:
9,800 7.3 percent coupon bonds outstanding, with 22 years to
maturity and a quoted price of 106. These bonds pay interest
semiannually.
Common stock:
265,000 shares of common stock selling for $65.30 per share.
The stock has a beta of .93 and will pay a dividend of $3.50 next
year. The dividend is expected to grow by 5.3 percent per year
indefinitely.
Preferred...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 39 seconds ago

asked 57 seconds ago

asked 37 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago