Question
A companys Balance Sheet (in millions) Assets Liabilities & Equity Current $30 Net Fixed $70 Bonds ($1000 Par) 75 Total $100 Common Stock ($1 par)
A companys Balance Sheet (in millions)
Assets Liabilities & Equity
Current $30
Net Fixed $70 Bonds ($1000 Par) 75
Total $100 Common Stock ($1 par) 25
Total $100
The company's bonds have a coupon rate of 9% with semi-annual payments, and currently sell for $1085. The maturity of those bonds is 12 years.
The companys applicable tax rate is 40%.
The common stock dividend has grown at a steady rate from $0.72 in December 1990 to $1.25 in December 2000. The same growth rate is expected to continue for long time in the future.
The floatation cost for new common stocks is 10%. The market value of the common stock is $12.
Next year is 2001.
8-What is the market value of debts weight?
a) 14.38%
b) 37.78%
c) 32.93%
d) 21.34%
e) 12.54%
f) None of the above
9-What is the market value of equitys weight?
a) 85.62%
b) 62.22%
c) 67.07%
d) 78.66%
e) 87.46%
f) None of the above
10-What is the cost of issuing new common stock?
a) 15.2%
b) 18.6%
c) 17.9%
d) 21.4%
e) 23.6%
f) None of the above
11-What is the WACC of the company using the market weights of capital structure?
a) 11.36%
b) 16.01%
c) 15.09%
d) 18.65%
e) 16.54%
f) None of the above
I will rate! I need to see the work/formulas. Thank you!
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