Question

In: Finance

You are given the following information about a company. The company pays no dividends. What is...

You are given the following information about a company. The company pays no dividends. What is the company’s WACC?

Debt:

Common Stock: Market:

90,000 bonds with a par value of $2,000 and a quoted price of 108.40. The bonds have coupon rate of 5.3 percent and 20 years to maturity. 40,000 zero coupon bonds with a quoted price of 29.15, 25 years to maturity, and a par value of $10,000. Assume semiannual coupon payments.

5.5 million shares of stock selling at a market price of $95 with a beta of 1.15.

The market risk premium is 6.8 percent and the risk-free rate is 2.8 percent. The tax rate is 21 percent.

*Please show excel formulas with answer

Solutions

Expert Solution

­SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 8 months ago
Next > < Previous

Related Solutions

Suppose that you are given the following information about the stock price/dividends for a company: Year...
Suppose that you are given the following information about the stock price/dividends for a company: Year Beginning of Year Price Dividend Paid at Year-End 2016 $80 $3 2017 $85 $4 2018 $78 $2 2019 $82 $2 If the company's stock price is $85 per share at the end of 2019, what is the arithmetic average return for an investment in XYZ over the period? What is the geometric average return for an investment in XYZ over the period? (Do not...
1. Given the information below about Thomas Corporation, what was the amount of dividends the company...
1. Given the information below about Thomas Corporation, what was the amount of dividends the company paid in the current period? Beginning retained earnings $ 54,000 Ending retained earnings $ 117,000 Decrease in cash $ 9,900 Net income $ 91,000 Change in stockholders’ equity $ 13,000 2. The ending Retained Earnings balance of Boomer Inc. decreased by $1.9 million from the beginning of the year. The company declared a dividend of $4.7 million during the year. What was the net...
Assume the following information about a company: Past dividends 2015                $1.32              &nbsp
Assume the following information about a company: Past dividends 2015                $1.32                           Required return = 11% 2016                $1.44                           2017                $1.54                           2018                $1.66 2019                $1.76 Use the appropriate dividend model to place a value on this stock for 2020. How do I set this up in excel?
Q3: You are given the following information about ABC Company for year 2017 and you are...
Q3: You are given the following information about ABC Company for year 2017 and you are required to compute net operating income using both absorption and variable costing with your comment on results. Number of units produced 30,000 Number of units sold 25,000 Units in begging inventory 0 Units sales price SR 40 Variable costs per units Direct material SR7 Direct labor SR5 Manufacturing overhead SR3 Selling and administrative expenses SR 5 Fixed expenses per year: Manufacturing overhead SR 150,000...
You are given the following information about a company: 1. There are 5,000,000 ordinary shares with...
You are given the following information about a company: 1. There are 5,000,000 ordinary shares with a nominal value of 10 pence each and a market value of £12 each. 2. Dividends on ordinary shares are paid annually and a dividend of 80 pence has just been paid. 3. Dividends on ordinary shares have been increased by around 5% p.a. and there is no reason to believe this will change in the future.  There is a bank loan of...
How is the dividend yield determined? Dividends are voluntary. Not every company pays dividends. What are...
How is the dividend yield determined? Dividends are voluntary. Not every company pays dividends. What are some advantages or disadvantages of investing in companies that pay dividends? Would you invest in a company that does not pay dividends? Please explain.
Would a stock that pays no dividends have any value? What about a stock with negative...
Would a stock that pays no dividends have any value? What about a stock with negative earnings (a negative P/E ratio)? What about a company with negative free cash flow? What do you think?
Consider the following information which relates to dividends per share (DPS) for a given company: Year...
Consider the following information which relates to dividends per share (DPS) for a given company: Year DPS 2019 $1.91 2018 $1.73 2017 $1.57 2016 $1.43 2015 $1.32 Today, we are in 2020. Management is in the process of deciding whether to expand or not to expand the firm’s branches. Below, is a set of inputs associated with each scenario: Scenario #1 – Do Not Expand: Dividend by the end of 2020 is expected to grow at the historical annual growth...
Consider the following information which relates to dividends per share (DPS) for a given company: Year...
Consider the following information which relates to dividends per share (DPS) for a given company: Year DPS 2019 $1.92 2018 $1.73 2017 $1.51 2016 $1.39 2015 $1.32 Today, we are in 2020. Management is in the process of deciding whether to expand or not to expand the firm’s branches. Below, is a set of inputs associated with each scenario: Scenario #1 – Do Not Expand: Dividend by the end of 2020 is expected to grow at the historical annual growth...
Consider the following information which relates to dividends per share (DPS) for a given company: Year...
Consider the following information which relates to dividends per share (DPS) for a given company: Year DPS 2019 $1.93 2018 $1.68 2017 $1.58 2016 $1.36 2015 $1.33 Today, we are in 2020. Management is in the process of deciding whether to expand or not to expand the firm’s branches. Below, is a set of inputs associated with each scenario: Scenario #1 – Do Not Expand: Dividend by the end of 2020 is expected to grow at the historical annual growth...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT