Surf Rider Inc. has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to...

Surf Rider Inc. has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price. The company’s 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $60 per share. The company’s 500,000 shares of common stock sell for $20 per share and have a beta of 1.2. The risk-free rate is 4%, and the market return is 12%. Assuming a 40% tax rate, what is the company’s WACC?

A. 7.11 percent

B. 7.37 percent

C. 7.25 percent

D. 7.53 percent

E. 7.88 percent

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity,...

A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price. The company’s 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk free rate is 4%, and the expected return on the market is 12%. The company recently paid a dividend of $2.0 per share on the common stock. The expected dividend growth rate is 7%. The...

- A corporation has 10,000 bonds outstanding with 6% annual coupon rate, 8 years to maturity,...

- A corporation has 10,000 bonds outstanding with 6% annual coupon rate, 8 years to maturity, $1,000 face value, and $1,100 market price. - The company’s 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk-free rate is 4%, and the market risk premium is 8%. - The company’s 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $30 per share. - Assuming a 40% tax rate, what...

A corporation has 10,000 bonds outstanding with a 7% annual coupon rate, 10 years to maturity,...

A corporation has 10,000 bonds outstanding with a 7% annual coupon rate, 10 years to maturity, a $1,000 face value, and a $950 market price. The company’s 400,000 shares of common stock sell for $85 per share, have a beta of 1.2, the risk-free rate is 2%, and the expected market return is 18%. Assuming a tax rate of 35%, what is this corporation’s weighted average cost of capital? Please use excel and show the formulas used if can. Thanks...

PP Inc. has outstanding bonds with an annual 8% coupon. The bonds have a par value...

PP Inc. has outstanding bonds with an annual 8% coupon. The bonds have a par value of $1,000 and a price of $865. The bonds will mature in 11 years. What is the yield to maturity on the bonds?

PP Inc. has outstanding bonds with an annual 8% coupon. The bonds have a par value...

PP Inc. has outstanding bonds with an annual 8% coupon. The bonds have a par value of $1000 and a price of $865. The bond will mature in 11 years. What is the yield to maturity on the bonds? Please show all workings. Do not Calculate using Excel

a manufacturing company has 40,000 bonds outstanding with a 10% annual coupon rate, 11 years to...

a manufacturing company has 40,000 bonds outstanding with a 10% annual coupon rate, 11 years to maturity, a $4000 face value, and a $4,1000 market price. yield to maturity (YTM) is 7.48%. the company's 800,000 shares of common stock sell for $55 per share and have a beta of 1.8. the risk-free rate is 4%,and the market return is 15%. assuming a 40% tax rate, what is the company;s WACC? Management has decided to add an additional 2.0 percent to...

Palmer Products has an outstanding bonds with an annual 8 percent coupon. The bonds have a...

Palmer Products has an outstanding bonds with an annual 8 percent coupon. The bonds have a per value of $1000 and a price of $865. The bonds will mature in 11 years. What is the maturity on the bonds? Gertrude Carter and Co. has an outstanding loan that calls for equal annual payments over the 10 year life of the loan. The original loan amount was $100,000.00 at a interest rate of 6 percent. How much of the third payment...

Dooley, Inc., has outstanding $150 million (par value) bonds that pay an annual coupon rate of...

Dooley, Inc., has outstanding $150 million (par value) bonds that pay an annual coupon rate of interest of 9.5 percent. Par value of each bond is $1,000. The bonds are scheduled to mature in 17 years. Because of Dooley’s increased risk, investors now require a 13 percent rate of return on bonds of similar quality with 17 years remaining until maturity. The bonds are callable at 108 percent of par at the end of 12 years. Use calculator to find...

Happy Hour Inc. has $1,000 par value bonds with 6% coupon rate and 6 years to...

Happy Hour Inc. has $1,000 par value bonds with 6% coupon rate and 6 years to maturity. If your required rate of return is 8%, what should be the price of the bond if the bonds pay interest semi-annually? Select one: a. $849.28 b. $1,187.70 c. $1,099.54 d. $906.15 e. $907.54

Goody's bonds pay a 8 percent annual coupon rate. The bonds mature in 13 years. The...

Goody's bonds pay a 8 percent annual coupon rate. The bonds mature in 13 years. The bond pays interest semiannually. What is the price per bond if the face value is $1,000 and the yield to maturity is 10 percent? (Round your answer to two decimal places. Do not enter dollar signs.)

Subjects