Question

In: Finance

Home Depot Inc has 750 bonds outstanding that are selling for $980 each, 2,500 shares of...

Home Depot Inc has 750 bonds outstanding that are selling for $980 each, 2,500 shares of preferred stock with a market price of $50 a share, and 30,000 shares of common stock valued at $55 a share. What weight should be assigned to the common stock when computing the firm's weighted average cost of capital?

Solutions

Expert Solution

Ans 65.74%

Stock No of shares/bonds (a) Price (b) INVESTMENT (i) = a * b
BONDS 750 980                              7,35,000
PREFERRED STOCK 2500 50                              1,25,000
COMMON STOCK 30000 55                            16,50,000
Total                            25,10,000
Weight of Common Stock = Investment in Common Stock / Total Investment
= 1650000 / 2510000 * 100
65.74%

jeff jeffy answered 5 months ago
Next > < Previous

Related Solutions

Brownfield Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a...
Brownfield Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0 percent coupon, pay interest semi-annually, and mature in 12.5 years. The company also has 11,500 shares of 6% preferred stock at a market price of $30 per share. This month, the company paid an annual dividend in the amount of $1.50 per share. The dividend growth rate is 4.0 percent. The common stock is priced at $30 a share and there are 35,500...
Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0...
Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0 percent coupon, pay interest semi-annually, and mature in 12.5 years. The company also has 11,500 shares of 6% preferred stock at a market price of $30 per share. This month, the company paid an annual dividend in the amount of $1.50 per share. The dividend growth rate is 4.0 percent. The common stock is priced at $30 a share and there are 35,500 shares...
ITT Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a...
ITT Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0 percent coupon, pay interest semi-annually, and mature in 12.5 years. The company also has 11,500 shares of 6% preferred stock at a market price of $30 per share. This month, the company paid an annual dividend in the amount of $1.50 per share. The dividend growth rate is 4.0 percent. The common stock is priced at $30 a share and there are 35,500...
Kirksville Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a...
Kirksville Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0 percent coupon, pay interest semi-annually, and mature in 12.5 years. The company also has 11,500 shares of 6% preferred stock at a market price of $30 per share. This month, the company paid an annual dividend in the amount of $1.50 per share. The dividend growth rate is 4.0 percent. The common stock is priced at $30 a share and there are 35,500...
Kirksville Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a...
Kirksville Inc. has 1,500 bonds outstanding that are selling for $932 each. The bonds carry a 5.0 percent coupon, pay interest semi-annually, and mature in 12.5 years. The company also has 11,500 shares of 6% preferred stock at a market price of $30 per share. This month, the company paid an annual dividend in the amount of $1.50 per share. The dividend growth rate is 4.0 percent. The common stock is priced at $30 a share and there are 35,500...
The VWX Inc. has 100,000 bonds outstanding (1000$ each) that are selling at 100%. The bonds...
The VWX Inc. has 100,000 bonds outstanding (1000$ each) that are selling at 100%. The bonds are yielding 7.5 percent. The company also has 1 million shares of preferred stock outstanding currently yielding 18.75 percent. It has also 5 million shares of common stock outstanding. The preferred stock sells for $56 per share and the common stock sells for $38 a share. The expected return on the common stock is 13.8%. The corporate tax rate is 34 percent. What is...
The VWX Inc. has 100,000 bonds outstanding (1000$ each) that are selling at 100%. The bonds...
The VWX Inc. has 100,000 bonds outstanding (1000$ each) that are selling at 100%. The bonds are yielding 7.5 percent. The company also has 1 million shares of preferred stock outstanding currently yielding 18.75 percent. It has also 5 million shares of common stock outstanding. The preferred stock sells for $56 per share and the common stock sells for $38 a share. The expected return on the common stock is 13.8%. The corporate tax rate is 34 percent. What is...
Kirksville Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a...
Kirksville Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a 6.0 percent coupon, pay interest semi-annually, and mature in 7.5 years. The company also has 9,500 shares of 5% preferred stock at a market price of $40 per share. This month, the company paid an annual dividend in the amount of $1.20 per share. The dividend growth rate is 5.0 percent. The common stock is priced at $30 a share and there are 34,500...
Kirksville Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a...
Kirksville Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a 6.0 percent coupon, pay interest semi-annually, and mature in 7.5 years. The company also has 9,500 shares of 5% preferred stock at a market price of $40 per share. This month, the company paid an annual dividend in the amount of $1.20 per share. The dividend growth rate is 5.0 percent. The common stock is priced at $30 a share and there are 34,500...
Lowes Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a...
Lowes Inc. has 1,100 bonds outstanding that are selling for $992 each. The bonds carry a 6.0percent coupon, pay interest semi-annually, and mature in 7.5 years. The company also has 9,500 shares of 5% preferred stock at a market price of $40per share. This month, the company paid an annual dividend in the amount of $1.20per share. The dividend growth rate is 5.0percent.The common stock is priced at $30a share and there are 34,500 shares outstanding. The company is considering...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT