Bottled Water is a listed European company which has a corporate finance structure as shown below. What
Question:
Bottled Water is a listed European company which has a corporate finance structure as shown below. What is the company’s WACC?
Transcribed Image Text:
Debt: Preferred stock: Common stock: Market: 50,000 bonds with a quoted price of 119.80, providing an 8 per cent coupon rate. The bonds have 25 years to maturity. There are also 150,000 zero-coupon bonds outstanding, with a quoted price of 13.85 and 30 years until maturity. 120,000 shares of 6.5 per cent preferred with a current price of 112 and a par value of 100. 2 million shares of common stock. The current share price is 65, and the beta of the stock is 1.1. The corporate tax rate is 40 per cent, the market risk premium is 5 per cent, and the risk-free rate is 4 per cent.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 25% (4 reviews)
Answer So the ...View the full answer
Answered By
Chiranjib Thakur
I have no tutoring experience yet, but I can share my skills and knowledge gained from my education and work experiences. I have been a CPA since 2012 with 6 years of work experience in internal auditing and 4 years of work experience in accounting at the supervisory level.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
Question Posted:
Students also viewed these Business questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Part A In the early 1980s, Bernard Hancock built a small brewery on his 150-acre property in the Macedon Ranges. The brewery, named Mountain Mist Brewery, was designed with ales in mind and Bernard...
-
Adam Baum Company borrowed $60,000 from B, A. Ware on January 1, 2021, and signed a three-year, 4% installment note to be paid in three equal payments at the end of each year. The present value of an...
-
Suppose you are given the following set of data with three Boolean input variables a, b, and c, and a single Boolean output variable K. a bc K 1 0 1 1 1 1 1 1 1 1 1 1 1 1 0 01 For parts (a) and (b),...
-
The average number N (in thousands) of daily newspapers in circulation in the United States from 2000 through 2014 can be approximated by the model N = 56,146 314.980t3/2, 0 ( t ( 14, where t...
-
Which of the following is a stronger indicator of cash flow flexibility? A. Cash flow from operating activities B. Cash flow to sales ratio C. Free cash flow D. All three indicate comparable degrees...
-
What is the probability that one consonant and one vowel are showing? We are considering two special 6 -sided dice. Each face is labeled with a number and a letter: the first die has faces \(1 A, 1...
-
A company makes a range of products with total budgeted manufacturing overheads of 973 560 incurred in three production departments (A, B and C) and one service department. Department A has 10 direct...
-
Ch 11-Grading HW 2 Exercise 11-48 (Algo) Net Realizable Value Method (LO 11-7) Saved Deming & Sons manufactures four grades of lubricant, W-10, W-20, W-30, and W-40, from a joint process. Additional...
-
Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debtequity ratio of 1.3. It is considering building a new 45 million manufacturing...
-
Och SpA is considering a project that will result in initial after-tax cash savings of 3.5 million at the end of the first year, and these savings will grow at a rate of 5 per cent per year...
-
How are specification reviews performed?
-
Discuss the implementation of advanced land valuation methodologies, such as spatial hedonic pricing models and geostatistical analysis techniques, in assessing the economic feasibility and market...
-
Question 4 (20 marks) (a)What is the beta value of a market portfolio? (4 marks) (b)What is the expected rate of return on a security with beta = 0? (4 marks) (c)Given that risk-free rate = 3% and...
-
Let Qd = 10 p + r represent the demand for raincoats in Seattle, where r is the monthly average rain level. Let Qs = p- r represent the supply for the raincoat. 3. Calculate the effect of a small...
-
At the start of the year, the stock price of Chang Corporation was $30 and appreciated to $35 at the end of the year. If dividends of $4 were paid during the year, determine the dividend yield for...
-
Sales Categories Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Values $ 42,400,000 $ 26,500,000 $ 5,300,000 $ 6,650,000 $...
-
Name the two types of ledgers.
-
Find the cross product a x b and verify that it is orthogonal to both a and b. a = (t, 1, 1/t), b = (t 2 , t 2 , 1)
-
Costs of Borrowing in exchange for a $400 million fixed commitment line of credit your firm has agreed to do the following. 1. Pay 1.6 percent per quarter on any funds actually borrowed. 2. Maintain...
-
Costs of Borrowing Come and Go Bank Offers your firm a 9 percent discount interest loan for up to $15 million, and in addition requires you to maintain a 5 percent compensating balance against the...
-
Cash management is it possible for a firm to have too much cash? Why would shareholders care if a firm accumulates large amount of cash?
-
[STAT6032 ONLY] Use the Bonferroni method to compare the following treatments (i.e. these four specific level combinations of speed and depth): (2,3), (2,4), (3,3) 6%). Calculate the critical...
-
Provide a purchase journal entry of a product (50$ above), which is comprised of a rational cognition purchase decision, extensive problem-solving decision, ideal state opportunity recognition,...
-
12345 1 Income Statement 2021 2020 2019 2018 Period Ending: 30/06 30/06 30/06 30/06 5 Total Revenue 671.74 598.85 784.51 777.95 6 Revenue 671.74 598.85 784.51 777.95 7 Other Revenue, Total 8 Cost of...
Study smarter with the SolutionInn App