Question

MV Corporation has debt with market value of $ 103 ?million, common equity with a book...

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 to two decimal? places.)

The common equity weight for the WACC calculation is %.?(Round to two decimal? places.)

Homework Answers

Answer #1

WACC is based on market value of capital constituents.

Market value of equity = $46 per share * 5.5 mil shares = $253 mil

Market Value of debt = $103 mil

Market Value of preferred Equity = $18 mil

Total Capital Market value = $253 mil + $103 mil + $18 mil = $374 mil

Weight of debt = Market Value of debt/Total Capital Market value = $103 mil/$374 mil = 27.54%

Weight of common equity = Market Value of common equity/Total Capital Market value = $253 mil/$374 mil =  67.65%

Weight of preferred stock = Market Value of preferred stock/Total Capital Market value = $18 mil/$374 mil =  4.81%

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
MV Corporation has debt with market value of $ 100 ​million, common equity with a book...
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...
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.)
Book Co. has 1.4 million shares of common equity with a par? (book) value of $...
Book Co. has 1.4 million shares of common equity with a par? (book) value of $ 1.35?, retained earnings of $ 29.9 ?million, and its shares have a market value of $ 50.41 per share. It also has debt with a par value of $ 18.3 million that is trading at 104 % of par. a. What is the market value of its? equity? The market value of the equity is ?$ million. ?(Round to two decimal? places.) b. What...
The BHP Corporation has debt with a market value of $55 million, preferred stock worth $3...
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...
Book Co has 1.6 million shares of common equity with a par (book) value of $1.20,...
Book Co has 1.6 million shares of common equity with a par (book) value of $1.20, retained earnings of $29.6 million, and its shares have a market value of $49.99 per share. It also has debt with a par value of $18.3 million that is trading at 103% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC?
The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The...
The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,423.92 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $13 per share. The preferred shares pay an annual dividend of $1.20. Oriole also has 14 million shares of common stock outstanding...
The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The...
The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,429.26 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $14 per share. The preferred shares pay an annual dividend of $1.20. Oriole also has 14 million shares of common stock outstanding...
Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with...
Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 25%. The current stock price is P0 = $27.00. The last dividend was D0 = $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...
Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with...
Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its before-tax cost of debt is 10%, and its marginal tax rate is 40%. The current stock price is P0 = $35.00. The last dividend was D0 = $3.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal...
Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with...
Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P0 = $29.50. The last dividend was D0 = $3.00, and it is expected to grow at a 8% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your...