A firm's balance sheet shows $900 million in shareholder's equity and $690 million in debt. The debt has an average yield to maturity of 6.7%. The firm also has $100 million in cash and short-term investments that is not required for business operations. The required return on the firm's equity is 14.0%, the current share price is $31.00, and it has 57 million shares outstanding. The corporate tax rate is 22%. What is this firm’s WACC?
8.0%
8.7%
9.8%
10.4%
11.8%
A firm's balance sheet shows $900 million in shareholder's equity and $690 million in debt. The...
1. A firm's balance sheet shows $900 million in shareholder's equity and $690 million in debt. The debt has an average yield to maturity of 6.7%. The firm also has $100 million in cash and short-term investments that is not required for business operations. The required return on the firm's equity is 14.0%, the current share price is $31.00, and it has 57 million shares outstanding. The corporate tax rate is 22%. What is this firm’s WACC? a. 8.0% b....
ABC Trucking's balance sheet shows a total of noncallable $38 million long-term debt with a coupon rate of 5.60% and a yield to maturity of 8.80%. This debt currently has a market value of $55 million. The balance sheet also shows that the company has 12 million shares of common stock, and the book value of the common equity is $216.20 million. The current stock price is $20.10 per share; stockholders' required return, rs, is 14.15%; and the firm's tax...
Problem 13-5 Calculating WACC (LO1) The total book value of WTC's equity is $8 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 13%. The firm's bonds have a face value of $5 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 10%, and the firm's tax rate is 21%. What is the company's WACC? (Do not...
A firm uses only debt and equity in its capital structure. The firm's weight of debt is 75 percent. The firm could issue new bonds at a yield to maturity of 12 percent and the firm has a tax rate of 30 percent. If the firm's WACC is 13 percent, what is the firm's cost of equity? 38.29 percent 36.00 percent 26.80 percent 4.00 percent
Zagrot Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 8.00% and a yield to maturity of 6.00%. This debt currently has a market value of $100 million. The balance sheet also shows that the company has 20 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $650 million. The current stock price is $100 per share; stockholders' required return, rs, is...
Adjusted WACC. Ashman Motors is currently an all-equity firm. It has two million shares outstanding, selling for $42 per share. The company has a beta of 1.4, with the current risk-free rate at 5.1% and the market premium at 8.7% the tax rate is 15% for the company. Ashman has decided to sell $42 million of bonds and retire half its stock. The bonds will have a yield to maturity of 8.7%. The beta of the company will rise to...
Suppose a firm has 33 million shares of common stock outstanding at a price of $40 per share. The firm also has 200,000 bonds outstanding with a current price of $1005.2. The outstanding bonds have yield to maturity 10.8%. The firm's common stock beta is 1.2 and the corporate tax rate is 36%. The expected market return is 12% and the T-bill rate is 6%. What is the WACC for this firm? (All answers should be in the format of...
10. Pld Company has debt with a yield to maturity of 5.9%, a cost of equity of 12.6%, and a cost of preferred stock of 8.8%. The market values of its debt, preferred stock, and equity are $11.9 million, $2.6 million, and $15.3 million, respectively, and its tax rate is 35%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pid's WACC is %. (Round to two...
Assume JUP has debt with a book value of $19 million, trading at 120% of par value. The bonds have a yield to maturity of 8%. The firm has book equity of $18 million, and 2 million shares trading at $15 per share. The firm's cost of equity is 11%. What is JUP's WACC if the firm's marginal tax rate is 30%? 9.54% 9.1% 8.67% 6.93%
Adjusted WACC Ashman Motors is currently an all-equity firm. It has two million shares outstanding, seling for $42 per share. The company has a beta of 0.8, with the current risk-free rate at 27% and the market premium at 9.1% The tax rate is 25% for the company. Ashman has decided to sell $42 million of bonds and retire half its stock. The bonds will have a yield to maturity of 8.7%. The bota of the company will rise to...