McCann Catching, Inc. has 2.00 milion shares of stock outstanding. The stock currently sells for $12.64 per share

McCann Catching, Inc. has 2.00 milion shares of stock outstanding. The stock currently sells for $12.64 per share. The firm's debt is publicly traded and was recently quoted at 91.00% of face value. It has a total face value of $17.00million , and it is currently priced to yield 9.00%. The risk free rate is 3.00% and the market risk premium is 8.00%. You've estimated that the firm has a beta of 1.29. The corporate tax rate is 38.00%.

The firm is considering a $42.83 million expansion of their production facility. The projoct has therame risk as the firm overall and will earn $11.00 million per year for 8.00 years.

What is the percentage of equity used by McCann Catching, Inc.?

Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)).

Expert Solution

McCann Catching Inc.
Sources of Finance	Market value=		Wt.of each to total=
Market value of Equity shares	2000000 shares *$12.64/sh.=	25280000	25280000/40750000=	62.04%
Market value of Debt	$ 17000000*91%=	15470000	15470000/40750000=	37.96%
Total market value of the finances used		40750000		100.00%

So, the answer is:
Percentage of equity used by McCann Catching Inc.= 62.04%.

Percentage of equity used by McCann Catching Inc.= 62.04%.

Junaid answered 2 years ago

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