Question
Hankins Corporation has the following information about their capital structure: Common Stock: 8.6mm shares selling, Priced at $65.10/share, Beta of 1.31 Preferred Stock: Market value
Hankins Corporation has the following information about their capital structure:
Common Stock:
8.6mm shares selling, Priced at $65.10/share, Beta of 1.31
Preferred Stock:
Market value of $65,209,000, Priced at $106.90, Dividend of $7.10
Debt:
186,000 bonds valued at $168,330,000, YTM = 9.46%
Market Information:
Risk free rate = 5.55%, Market Premium = 6.85%, Tax Rate = 30%
What is the firm's market value?
What is the firm's cost of each form of financing? (e.g. Re, Rp, Rd)?
If the firm is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows (WACC)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started