Question
In: Finance
Suppose Corporation A has a book (face) debt value of $9M, trading at 85% of face...
Suppose Corporation A has a book (face) debt value of $9M, trading at 85% of face value. It also has book equity of $16 million, and 2.88 million shares of common stock trading at $24 per share. What is the weight for for common equity that Corporation A should use in calculating its WACC?
Solutions
Expert Solution
Market value of debt = $9 million * 0.85 = $7.65 million
Market value of common stock = 2.88 million shares * $24 = $69.12 million
Total value = $7.65 million + $69.12 million = $76.77 million
Weight for for common equity = Market value of common stock / Total value
Weight for for common equity = $69.12 million / $76.77 million
Weight for for common equity = 0.9004 or 90.04%
jeff jeffy answered 2 years agoRelated Solutions
Suppose Corporation A has a book (face) debt value of $9M, trading at 85% of face...
Suppose Corporation A has a book (face) debt value of $9M,
trading at 85% of face value. It also has book equity of $16
million, and 2.88 million shares of common stock trading at $24 per
share. What is the weight for for common equity that Corporation A
should use in calculating its WACC?
Suppose Corporation A has a book (face) debt value of $10M, trading at 85% of face...
Suppose Corporation A has a book (face) debt value of $10M,
trading at 85% of face value. It also has book equity of $16
million, and 1.78 million shares of common stock trading at $29 per
share. What is the weight for debt that Corporation A should use in
calculating its WACC?
Suppose Corporation A has a book (face) debt value of $12M, trading at 77% of face...
Suppose Corporation A has a book (face) debt value of $12M,
trading at 77% of face value. It also has book equity of $20
million, and 1.81 million shares of common stock trading at $21 per
share. What is the weight for debt that Corporation A should use in
calculating its WACC?
suppose cooperation A has a book face debt value of $13m trading at 82% of face...
suppose cooperation A has a book face debt value of $13m trading
at 82% of face value. It also has book equity of 17 million and
1.07 million shares of common stock trading at $26 per share. what
is the weight for common equity that cooperation A should use in
calculating its WACC?
At 2018 ABI Construction has a face debt value of 27.14M trading at 86% with a...
At 2018 ABI Construction has a face debt value of 27.14M trading
at 86% with a pre-tax weigthed cost of 4.12%. ABI common equity for
the year was valued at 94.15M and preferred equity for 11.11M. The
Preferred equity rate was calculated to be 7.52%. However, the
common equity was to be calculated using CAPM approach, with a 3%
risk free rate and a 7% market risk premium rate, assuming a 1.32
Beta. If the tax rate is 38%, What...
At 2018 ABI Construction has a face debt value of 26.82M trading at 86% with a...
At 2018 ABI Construction has a face debt value of 26.82M trading
at 86% with a pre-tax weigthed cost of 6.18%. ABI common equity for
the year was valued at 95.28M and preferred equity for 11.49M. The
Preferred equity rate was calculated to be 8.48%. However, the
common equity was to be calculated using CAPM approach, with a 3%
risk free rate and a 7% market risk premium rate, assuming a 1.39
Beta. If the tax rate is 41%, What...
At 2018 ABI Construction has a face debt value of 27.02M trading at 87% with a...
At 2018 ABI Construction has a face debt value of 27.02M trading
at 87% with a pre-tax weigthed cost of 5.36%. ABI common equity for
the year was valued at 115.1M and preferred equity for 11.94M. The
Preferred equity rate was calculated to be 8.92%. However, the
common equity was to be calculated using CAPM approach, with a 3%
risk free rate and a 7% market risk premium rate, assuming a 1.37
Beta. If the tax rate is 38%, What...
Assume JUP has debt with a book value of $23 ?million, trading at? 120% of par...
Assume JUP has debt with a book value of $23 ?million, trading
at? 120% of par value. The firm has book equity of $27 ?million,
and 2 million shares trading at $18 per share. What weights should
JUP use in calculating its? WACC?
Use the following information: Debt: $80,000,000 book value outstanding. The debt is trading at 95% of...
Use the following information:
Debt: $80,000,000 book value outstanding. The debt is trading
at 95% of book value. The yield to maturity is 9%.
Equity: 3,000,000 shares selling at $47 per share. Assume the
expected rate of return on Federated’s stock is 18%.
Taxes: Federated’s marginal tax rate is Tc
= 0.21.
Suppose Federated Junkyards decides to move to a more
conservative debt policy. A year later, its debt ratio is down to
13.75% (D/V = 0.1375). The interest rate...
Use the following information: Debt: $69,000,000 book value outstanding. The debt is trading at 95% of...
Use the following information:
Debt: $69,000,000 book value outstanding. The debt is trading
at 95% of book value. The yield to maturity is 10%.
Equity: 1,900,000 shares selling at $36 per share. Assume the
expected rate of return on Federated’s stock is 19%.
Taxes: Federated’s marginal tax rate is Tc
= .35.
Suppose Federated Junkyards decides to move to a more
conservative debt policy. A year later its debt ratio is down to
16.50% (D/V = .165). The interest rate...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 3) You are rolling a 12 sided die 8 times. a) What is the size for...
- explain the difference between quantitative and qualitative research strategies. Provide an example of a crime based...
- use postorder and inorder tree traversals to make preorder traversal. #!/usr/bin/env python3 # encoding: UTF-8 """Turning...
- 1. Write an if-else statement to describe an object. Print "Balloon" if isBalloon is true and...
- An investor is considering purchasing a Treasury bond with a 20 year maturity, an 8% coupon...
- Write a program that copies the contents of one file to a destination file. This program...
- how to conduct a marketing mix for 3d crest white strips
ADVERTISEMENT