ZuoTi.Pro
Question


Question 19 (1 point) Jakes Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Y
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

rate positively ..

Cost of equity =
Dividend next year/Price today + growth rate 9.27%
1.825*104%/36+4%
Cost of debt =
we have to use financial calculator to solve this
put in calculator-
FV 1000
PV -990
PMT 1000*7% 70
N 4
Compute I 7.30%
Post tax cost of debt =
7.25%*(1-34%) 4.82%
Computation of WACC
Source Value weight cost weight *cost
Debt 7560000 210000*36 56.00% 4.82% 2.70%
equity 5940000 6000*1000*99% 44.00% 9.27% 4.08%
13500000 6.78%
WACC = 6.78%
Therefore correct answer is option : None of the above
0 0
Add a comment
Know the answer?
Add Answer to:
Question 19 (1 point) Jake's Sound Systems has 210,000 shares of common stock outstanding at a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Q2. (25 marks) I Burnaby Music Inc. has 210,000 shares of common stock outstanding at a...

    Q2. (25 marks) I Burnaby Music Inc. has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, the company paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4 %. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 % coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99 %...

  • toyo Manufacturing has 1,000,000 shares of common stock outstanding at a market price of $40.20 a...

    toyo Manufacturing has 1,000,000 shares of common stock outstanding at a market price of $40.20 a share. Last month, the company paid an annual dividend in the amount of $2.34 per share. The dividend growth rate is 3%. Toyo Manufacturing also has 25,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 6% coupon, pay interest annually, and mature in 10 years. The bonds are selling at 98% of face value. The company's tax rate...

  • Aaron's Rentals has 50,000 shares of common stock outstanding at a market price of $38 a...

    Aaron's Rentals has 50,000 shares of common stock outstanding at a market price of $38 a share. The company has a beta of 1.2 and the market risk premium is 8%, with risk free rate of 3.5%. The outstanding bonds mature in 10 years, have a total face value of $800,000, a face value per bond of $1,000, and a market price of $987.60 each. The bonds pay 6% coupon. The tax rate is 30 percent. What is the firm's...

  • Musical Memories, Inc. has 230,000 shares of common stock outstanding as a market price of $14...

    Musical Memories, Inc. has 230,000 shares of common stock outstanding as a market price of $14 per share. The historical dividends (per share) for the firm were as follows: 2007: $1.10 2008: $1.10 2009: $1.12 2010: $1.15 2011: $1.17 2012: $1.20 Musical Memories also has 8,000 bonds outstanding that are currently selling for 102 percent of face value. The bonds carry an 8.5% coupon rate and mature in 5 years. There are also 51,000 shares of preferred stock outstanding currently...

  • Glope Manufacturing has 9,161,454 shares of common stock outstanding. The current share price is $39.51, and...

    Glope Manufacturing has 9,161,454 shares of common stock outstanding. The current share price is $39.51, and the book value per share is $3.95. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $44,225,980, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $46,764,468, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par....

  • Filer Manufacturing has 8,965,201 shares of common stock outstanding. The current share price is $27.09, and...

    Filer Manufacturing has 8,965,201 shares of common stock outstanding. The current share price is $27.09, and the book value per share is $3.78. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $73,031,874, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $77,711,671, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par....

  • Filer Manufacturing has 4,294,390 shares of common stock outstanding. The current share price is $59.03, and...

    Filer Manufacturing has 4,294,390 shares of common stock outstanding. The current share price is $59.03, and the book value per share is $5.34. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $55,657,525, has a 0.08 coupon, matures in 13 years and sells for 98 percent of par. The second issue has a face value of $60,631,873, has a 0.08 coupon, matures in 15 years, and sells for 97 percent of par....

  • Bona Manufacturing has 9,670,770 shares of common stock outstanding. The current share price is $53.94, and...

    Bona Manufacturing has 9,670,770 shares of common stock outstanding. The current share price is $53.94, and the book value per share is $8.52. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $49,562,116, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $74,334,734, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par....

  • Filer Manufacturing has 9,751,658 shares of common stock outstanding. The current share price is $56.8, and...

    Filer Manufacturing has 9,751,658 shares of common stock outstanding. The current share price is $56.8, and the book value per share is $4.59. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $61,319,037, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $65,866,091, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par....

  • Filer Manufacturing has 9,112,357 shares of common stock outstanding. The current share price is $35.38, and...

    Filer Manufacturing has 9,112,357 shares of common stock outstanding. The current share price is $35.38, and the book value per share is $9.99. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $42,149,174, has a 0.09 coupon, matures in 17 years and sells for 97 percent of par. The second issue has a face value of $65,868,987, has a 0.05 coupon, matures in 13 years, and sells for 97 percent of par....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT