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please answer 27-31 as they all have to do with the set of data A. A7. Assume that you are on the financial staff of
please answer 27-31 as they all have to do with the set of data
A. A7. Assume that you are on the financial staff of Vanderheiden lne, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%, its tax mate is 40%, the next expected dividend is 90.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is S19.00 per share, the flotation cost for sclling new shares is F=10%, and the target capital structure is 45% debt and 55% common equity. What is the fim's WACC. assaming it must issue new stock to finance its capital bodget? a. 8.68% b. 793% c. 7.78% d. 8.76% c. 7.48% Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastie grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. The stock is currently selling for $15.00 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semianmal payments are selling for $1,150.00. The beta is 1.35, the yicld on a 6 -month Treasury bill is 3.50%, and the yield on a 20 -year Treasury bond is 5,50%. The required retum on the stock market is 1150%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 40% 28. What is the best estimate of the after-tax cost of debt? a. 4.15% b. 4.47% c. 4.11% d. 3.57% c. 3.65% 29. Based on the CAPM, what is the fim's cost of equity? 3. 13.60% b. 15.64% c. 16.73% d. 1156% e. 10.20% 30. Which of the following is the best estimate for the weight of debt for use in calculating the WACC? a. 29.34% b. 23.47% c. 28.87% d. 25.11% e. 20.42% 31. What is the best estimate of the firm's WACC? a. 11.92% b. 11.25% c. 11.81% d. 12.48% e. 8.89% Step by Step Solution
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