Question

Hankins Corporation has 7.9 million shares of common stock outstanding, 540,000 shares of 7.4 percent preferred...

Hankins Corporation has 7.9 million shares of common stock outstanding, 540,000 shares of 7.4 percent preferred stock outstanding, and 179,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.40 per share and has a beta of 1.24, the preferred stock has a par value of $100 and currently sells for $107.60 per share, and the bonds have 13 years to maturity and sell for 94 percent of par. The market risk premium is 7 percent, T-bills are yielding 5.7 percent, and the firm’s tax rate is 35 percent.

What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Market value weight of debt
Market value weight of preferred stock
Market value weight of equity

  
What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt %
Cost of preferred stock %
Cost of equity %


If the firm is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Weighted average cost of capital              %

Homework Answers

Answer #1

Calculation is shown below

Working is given below

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
Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4 percent preferred...
Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4 percent preferred stock outstanding, and 184,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.90 per share and has a beta of 1.29, the preferred stock currently sells for $107.10 per share, and the bonds have 13 years to maturity and sell for 91.5 percent of par. The market risk premium is 7 percent, T-bills are yielding 5.7...
Calculating WACC Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4...
Calculating WACC Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4 percent preferred stock outstanding, and 184,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.90 per share and has a beta of 1.29, the preferred stock currently sells for $107.10 per share, and the bonds have 13 years to maturity and sell for 91.5 percent of par. The market risk premium is 7 percent, T-bills are...
Hankins Corporation has 8.8 million shares of common stock outstanding, 630,000 shares of 7.3 percent preferred...
Hankins Corporation has 8.8 million shares of common stock outstanding, 630,000 shares of 7.3 percent preferred stock outstanding, and 188,000 of 8.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.30 per share and has a beta of 1.33, the preferred stock currently sells for $106.70 per share, and the bonds have 14 years to maturity and sell for 89.5 percent of par. The market risk premium is 6.95 percent, T-bills are yielding 5.65...
Hankins Corporation has 6.4 million shares of common stock outstanding, 225,000 shares of 3.7 percent preferred...
Hankins Corporation has 6.4 million shares of common stock outstanding, 225,000 shares of 3.7 percent preferred stock outstanding, par value of $100; and 110,000 bonds with a semiannual coupon rate of 5.4 percent outstanding, par value $1,000 each. The common stock currently sells for $72 per share and has a beta of 1.20, the preferred stock has a par value of $100 and currently sells for $84 per share, and the bonds have 18 years to maturity and sell for...
Titan Mining Corporation has 8.6 million shares of common stock outstanding, 300,000 shares of preferred stock...
Titan Mining Corporation has 8.6 million shares of common stock outstanding, 300,000 shares of preferred stock outstanding, and 160,000 bonds outstanding with a par value of $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.30, the preferred stock currently sells for $84 per share, and the bonds sell for 115 percent of par. The cost of common equity is 12.62 percent, preferred equity is 5.95 percent, and the debt's yield to maturity...
Titan Mining Corporation has 8.8 million shares of common stock outstanding, 320,000 shares of 4 percent...
Titan Mining Corporation has 8.8 million shares of common stock outstanding, 320,000 shares of 4 percent preferred stock outstanding, and 170,000 7.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $36 per share and has a beta of 1.40, the preferred stock currently sells for $86 per share, and the bonds have 10 years to maturity and sell for 117 percent of par. The market risk premium is 7.6 percent, T-bills are yielding 5...
Titan Mining Corporation has 8.7 million shares of common stock outstanding, 310,000 shares of 6 percent...
Titan Mining Corporation has 8.7 million shares of common stock outstanding, 310,000 shares of 6 percent preferred stock outstanding, and 165,000 7.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $35 per share and has a beta of 1.35, the preferred stock currently sells for $85 per share, and the bonds have 20 years to maturity and sell for 116 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 5...
Titan Mining Corporation has 6.5 million shares of common stock outstanding, 230,000 shares of 3.8 percent...
Titan Mining Corporation has 6.5 million shares of common stock outstanding, 230,000 shares of 3.8 percent preferred stock outstanding, and 115,000 bonds with a semiannual coupon rate of 5.5 percent outstanding, par value $1,000 each. The common stock currently sells for $71 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $85 per share, and the bonds have 19 years to maturity and sell for 109 percent of...
Titan Mining Corporation has 7.8 million shares of common stock outstanding, 290,000 shares of 4.3 percent...
Titan Mining Corporation has 7.8 million shares of common stock outstanding, 290,000 shares of 4.3 percent preferred stock outstanding, and 175,000 bonds with a semiannual coupon rate of 5.9 percent outstanding, par value $2,000 each. The common stock currently sells for $59 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $97 per share, and the bonds have 16 years to maturity and sell for 103 percent of...
) Hankins Corporation has 8 million shares of common stock outstanding, 920,000 shares of preferred stock...
) Hankins Corporation has 8 million shares of common stock outstanding, 920,000 shares of preferred stock outstanding, and 180,000 of 5.5 percent semiannual bonds outstanding, par value $1,000 each. The annual dividend for the preferred stocks is $4.8 per share. The common stock currently sells for $39 per share and has a beta of 1.26, the preferred stock currently sells for $80 per share, and the bonds have 25 years to maturity and sell for 98 percent of par. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT