Question

A firm has $10 million common equity on the balance sheet. The firm's stock price is $25/share and the firm has 1 million shares of stock. The firm has no preferred stock. The firm has total debt at a book value of $30 million but interest rate changes have increased the value of the debt to a current market value of $35 million. To compute WACC of the firm, the weight for equity should be _____ and the weight for debt should be ______.

The answer is 42% and 58%, just don't know how it came to be.

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.)

Suppose a firm has 49.00 million shares of common stock
outstanding at a price of $13.80 per share. The firm also has
410000.00 bonds outstanding with a current price of $1,056.00. The
outstanding bonds have yield to maturity 6.31%. The firm's common
stock beta is 2.33 and the corporate tax rate is 38.00%. The
expected market return is 9.11% and the T-bill rate is 1.74%.
Compute the following:
-Weight of
Equity of the firm?
-Weight of
Debt of...

Suppose a firm has 17.30 million shares of common stock
outstanding at a price of $12.87 per share. The firm also has
156000.00 bonds outstanding with a current price of $1,139.00. The
outstanding bonds have yield to maturity 8.00%. The firm's common
stock beta is 2.306 and the corporate tax rate is 37.00%. The
expected market return is 10.09% and the T-bill rate is 4.40%.
Compute the following:
a) Weight of Equity of the firm
b) Weight of Debt of...

Suppose
a firm has 37.80 million shares of common stock outstanding at a
price of $41.96 per share. The firm also has 119000.00 bonds
outstanding with a current price of $1,187.00. The outstanding
bonds have yield to maturity 8.34%. The firm's common stock beta is
2.124 and the corporate tax rate is 40.00%. The expected market
return is 10.45% and the T-bill rate is 3.44%. Compute the
following:
a) Weight of Equity of the firm
b) Weight of...

Q) Suppose a firm has 36.80 million shares of common stock
outstanding at a price of $30.50 per share. The firm also has
224000.00 bonds outstanding with a current price of $1,092.00. The
outstanding bonds have yield to maturity 7.62%. The firm's common
stock beta is 0.73 and the corporate tax rate is 40.00%. The
expected market return is 14.13% and the T-bill rate is 2.14%.
Compute the following:
-Weight of Equity of the firm
-Weight of Debt of the...

Q) Suppose a firm has 48.50 million shares of common stock
outstanding at a price of $38.28 per share. The firm
also has 295000.00 bonds outstanding with a current price of
$1,174.00. The outstanding bonds have yield to maturity 6.51%. The
firm's common stock beta is 1.24 and the corporate tax rate is
39.00%. The expected market return is 14.85% and the T-bill rate is
5.36%. Compute the following:
-Weight of Equity of the firm
-Weight of Debt of the firm...

Q1)
Suppose a firm has 49.70 million shares of common stock outstanding
at a price of $45.23 per share. The firm also has 261000.00 bonds
outstanding with a current price of $919.00. The outstanding bonds
have yield to maturity 9.35%. The firm's common stock beta is 1.345
and the corporate tax rate is 40.00%. The expected market return is
11.81% and the T-bill rate is 2.50%. Compute the following:
a) Weight of Equity of the firm
b) Weight...

A firm has 12,000 shares of common stock outstanding with a book
value of $20 per share and a market value of $39. There are 5,000
shares of preferred stock with a book value of $22 and a market
value of $26. There is a $400,000 face value bond issue outstanding
that is selling at 87% of par. What weight should be placed on the
preferred stock when computing the firm's WACC?
Please show all work

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