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The Ashford Twins hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The company's noncallable bonds mature in 20 years, have a coupon rate of 8.00% paid annually, a par value of $1,000, and a current market price of $950. (2) The company's tax rate is 21%. (3) The required
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- Inzaghi Company recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The company has noncallable bonds with $1,000 face value and coupon rate of 10% (paid semi-annually). The bonds mature in 4 years, and have current price of $1,140. (2) The company’s tax rate is 30%. (3) The current price of the company’s stock is $80.00 per share. Dividends are expected to grow at 5% indefinitely and the most recent dividend paid by the company was $2.75 per share. (4) The target capital structure of the company consists of 41.5% debt and the balance is common equity. (5) The company is not planning to issue any new common stock. What is Inzaghi Company’s WACC? ** You must explain your approach in writing in four lines. No credit is given without explanation.Outer Wilds Inc. hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The company's noncallable bonds mature in 20 years, have a coupon rate of 6.00% paid annually, a par value of $1,000, and a current market price of $900. (2) The company's tax rate is 25%. (3) The required rate of return on the company's common stock based on CAPM is 10.0 %. ( 4 ) The target capital structure consists of 40% debt, with the remainder comprised of common equity. What is its WACC? 6.69% O 8.78% O 7.12% O 7.47% O 8.08%The company you work for wants you to estimate the company’s WACC; but before you do so, you need to estimate the cost of debt and equity. You have obtained the following info. 1) the firms non-callable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000 and a market price of $1,225.00. 2) the company’s tax rate is 40%. 3) the risk-free rate is 4.50%, the market risk premium 5.50%, and the stocks betta is 1.20. 4) the target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any common stock. Calculate the company’s component cost of debt.
- The company you work for wants you to estimate the company’s WACC; but before you do so, you need to estimate the cost of debt and equity. You have obtained the following info. 1) the firms non-callable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000 and a market price of $1,225.00. 2) the company’s tax rate is 40%. 3)the risk-free rate is 4.50%, the market risk premium is 5.50%, and the stocks beta is 1.20. 4) the target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any common stock. WHAT is the WACC?Loran Chalices Inc. hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The company's noncallable bonds mature in 20 years, have a coupon rate of 7.00% paid annually, a par value of $1,000, and a current market price of $875. (2) The company's tax rate is 25%. (3) The required rate of return on the company's common stock based on CAPM is 10.3%. (4) The target capital structure consists of 45% debt, with the remainder comprised of common equity. What is its WACC?Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,000.00. (2) The company's tax rate is 25%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC? Do not round your intermediate calculations.
- The company you work for wants you to estimate the company’s WACC; but before you do so, you need to estimate the cost of debt and equity. You have obtained the following info. 1) the firms non-callable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000 and a market price of $1,225.00. 2) thecompany’s tax rate is 40%. 3) the risk-free rate is 4.50%, the market risk premium 5.50%, and the stocks betta is 1.20. 4) the target capital structure consists of 35% debt and the balance common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. Calculate the company’s cost of retained earnings using the CAPM approach.Petmart recently hired Jim as a consultant to estimate the company’s WACC. Jim has obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.80. (4) The target capital structure consists of 45% debt and the balance is common equity. The firm uses CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?Avery Corporation's recently hired you as a consultant to estimate WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company's tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
- Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC?Indie Inc. recently hired you as a consultant to estimate the company's WACC. You get the following information. (1) Indie Inc. non-callable bonds matures in 25 years, has an 8.00% annual coupon, a face value of $1,000, and a market price of $1,075.00. (2) The corporate tax rate is 40%. (3) The risk-free rate of return is 4.50%, the market risk premium is 5.50%, and the beta of the stock is 1.20. (4) The target capital structure consists of 35% debt and the rest is common stock. Indie Inc. uses the CAPM to estimate the cost of equity, and will not issue new common stock. How much is WACC worth? a. 7.13% b. 7.51% c. 7.90% d. 8.32% e. 8.76%Cts Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you.To get started with your work, you compile some information as follows:1. Cts Ltd has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now.2. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cts Ltd stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share.3. The risk-free rate is 4% and the market risk premium is 6% Compute: 1. The minimum required return by Cts Ltd's debtholders 2. The minimum required return by Cts Ltd's common shareholders3. The minimum required return by Cts Ltd's preferred shareholders4. The…
