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Question 14 Suppose you are given the following information for the Legends of Clash Co. Debt:...
Question 14
Suppose you are given the following information for the Legends of Clash Co.
Debt: 18,000 bonds outstanding, with a face value of $1,000. The bonds currently trade at 112.5% of par value, and have 15 years to maturity. The coupon rate equals 4%, and the bonds make semi-annual coupon payments.
Common stock: 925,000 shares of common stock outstanding; currently trading for $56 per share. Beta equals 1.45.
Preferred stock: 150,000 shares of preferred stock outstanding; currently trading for $97.5 per share; pays a $8.25 dividend every year.
Market: The expected return on the market equals 10%, and the risk free rate is 1%.
Tax rate: 30%
Calculate the weight of the common stock in the capital structure. (Enter percentages as decimals and round to 4 decimal places)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Suppose you are given the following information for the Legends of Clash Co. Debt: 18,000 bonds...
Suppose you are given the following information for the Legends
of Clash Co.
Debt: 18,000 bonds outstanding, with a face
value of $1,000. The bonds currently trade at 112.5% of par value,
and have 15 years to maturity. The coupon rate equals 4%, and the
bonds make semi-annual coupon payments.
Common stock: 925,000 shares of common stock
outstanding; currently trading for $56 per share. Beta equals
1.45.
Preferred stock: 150,000 shares of preferred
stock outstanding; currently trading for $97.5 per...
You are given the following information concerning Baron Co. Calculate the WACC for Baron Co. Debt:...
You are given the following information concerning Baron Co.
Calculate the WACC for Baron Co.
Debt: 17,958 5% coupon bonds outstanding, quoted at 105, with
20 years to maturity. These bonds pay interest semiannually.
Common Stock: 350,000 shares common stock selling for $56.02
per share. The stock has a beta of 1.49.
Preferred Stock: 10,000 shares of preferred stock with a
dividend of $5.20 per share. It is currently selling at $106.37 per
share.
Market: The market premium is 7.5%,...
You are given the following information concerning Baron Co. Calculate the WACC for Baron Co. Debt:...
You are given the following information concerning Baron Co.
Calculate the WACC for Baron Co.
Debt: 11,162 5% coupon bonds outstanding, quoted at 105, with
20 years to maturity. These bonds pay interest semiannually.
Common Stock: 350,000 shares common stock selling for $52.86
per share. The stock has a beta of 1.39.
Preferred Stock: 10,000 shares of preferred stock with a
dividend of $5.20 per share. It is currently selling at $108.09 per
share.
Market: The market premium is 7.5%,...
You are given the following information concerning Baron Co. Calculate the WACC for Baron Co. Debt:...
You are given the following information concerning Baron Co.
Calculate the WACC for Baron Co.
Debt: 10,416 5% coupon bonds outstanding, quoted at 105, with
20 years to maturity. These bonds pay interest semiannually.
Common Stock: 350,000 shares common stock selling for $56.88
per share. The stock has a beta of 1.00.
Preferred Stock: 10,000 shares of preferred stock with a
dividend of $5.20 per share. It is currently selling at $101.09 per
share.
Market: The market premium is 7.5%,...
Suppose that you are given the following information. Answer the following question: Labor force 200 million...
Suppose that you are given the following information. Answer the
following question:
Labor force
200 million
Adults in the military
1 million
Population below 16
50 million
Employed adults
180 million
Institutionalized adults
3 million
Not in Labor force
40 million
1. What is the total population? ( show your work)
2. How many people are unemployed, and what is the unemployment
rate?
3. what is the labor force participation rate?
14. Finding the WACC Given the following information for Lightning Power Co., find the WACC. Assume...
14. Finding the WACC Given the following information for
Lightning Power Co., find the WACC. Assume the company’s tax rate
is 21 percent. Debt: 16,000 6.2 percent coupon bonds outstanding,
$1,000 par value, 25 years to maturity, selling for 108 percent of
par; the bonds make semiannual payments. Common stock: 535,000
shares outstanding, selling for $81 per share; beta is 1.20.
Preferred stock: 20,000 shares of 4.2 percent preferred stock
outstanding, currently selling for $92 per share. The par value...
Case Two (22 pts) Given the following information for Bajor Co.: Debt: Bajor’s long-term debt capital...
Case Two (22 pts) Given the following information for Bajor
Co.:
Debt: Bajor’s long-term debt capital consists of bonds with
6.250 percent coupon rate (semiannual coupon payments), 9 years
time-to-maturity, and current price of 106.61 percent of its par
value (i.e., price = 106.61 relative to full amount redemption par
of 100).
Preferred stock: Bajor has not issued any preferred stocks.
Common stock (equity): Bajor’s equity capital consists of
common stocks with the most recent annual dividend of $0.92...
Please write clear answer!! 14. Finding the WACC Given the following information for Lightning Power Co.,...
Please write clear answer!!
14. Finding the WACC Given the following information for
Lightning Power Co., find the WACC. Assume the company’s tax rate
is 21 percent. Debt: 16,000 6.2 percent coupon bonds outstanding,
$1,000 par value, 25 years to maturity, selling for 108 percent of
par; the bonds make semiannual payments. Common stock: 535,000
shares outstanding, selling for $81 per share; beta is 1.20.
Preferred stock: 20,000 shares of 4.2 percent preferred stock
outstanding, currently selling for $92 per...
Q3. Suppose Westerfield Co. has the following financial information: Debt: 50,000 bonds outstanding with a face...
Q3. Suppose Westerfield Co. has the following financial
information:
Debt: 50,000 bonds outstanding with a face
value of $1,000. The bonds currently trade at 106% of par and have
10 years to maturity. The coupon rate equals 5%, and the bonds make
semi-annual interest payments.
Preferred stock: 500,000 shares of preferred
stock outstanding; currently trading for $108 per share and it pays
a dividend of $7.25 per share every year.
Common stock: 1,250,000 shares of common stock
outstanding; currently trading...
Question 3: (22 points) Suppose you are given the following information about a particular industry: Q^d=...
Question 3: (22 points)
Suppose you are given the following information about a
particular industry:
Q^d= 1600 –
150P
Market demand
Q^s=
250P
Short run market Supply
The Firm total cost function consists of a Fixed Cost of 45 and
a Variable Cost of (q^2)/5
Assume that all firms are identical in a market that is
perfectly competitive.
(1 point) Correctly write the Firm total cost function
(4 point) Using the demand and supply curves for this industry,
find the...
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