Question

You have been given the task of calculating the WACC of ABC Inc. You will use...

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)

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
You have been given the task of calculating the WACC of ABC Inc. You will use...
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...
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...
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                                       &nbsp
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...
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...
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...
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...
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...
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:...
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...