A firm has $7.9 Billion debt outstanding, with a yield to maturity of 5.2% and a coupon rate of 4.2%. They have 104 million preferred shares outstanding, currently trading at $85.45. They also have 355 million common shares outstanding, currently trading at $42 and the corporate tax rate is 22%. If the return on common stock (return on equity) is 9.8% and the return on preferred stock is 7.2% what is the Weighted Average Cost of Capital (WACC)?
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- Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.7. There are 1 million common shares outstanding. The market risk premium is 8%, the risk-free rate is 4%, and the firm’s tax rate is 21%. BOOK-VALUE BALANCE SHEET (Figures in $ millions) Assets Liabilities and Net Worth Cash and short-term securities $ 2.0 Bonds, coupon = 6%, paid annually(maturity = 10 years, current yield to maturity = 7%) $ 10.0 Accounts receivable 5.0 Preferred stock (par value $10 per share) 3.0 Inventories 9.0 Common stock (par value $0.10) 0.1 Plant and equipment 22.0 Additional paid-in stockholders’ equity 8.9 Retained earnings 16.0 Total $ 38.0 Total $ 38.0 a. What is the market debt-to-value ratio of the firm? b. What is University’s…Examine the following book-value balance sheet for University Products Incorporated. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of 0.7. There are 2 million common shares outstanding. The market risk premium is 12%, the risk-free rate is 8%, and the firm's tax rate is 21%. BOOK-VALUE BALANCE SHEET Liabilities and Net Worth (Figures in s millions). Assets Cash and short-term securities $ 1.0 Bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 10.0 Accounts receivable 4.0 Preferred stock (par value $20 per share) 3.0 Inventories Plant and equipment 8.0 24.0 Common stock (par value $0.10) 0.2 Additional paid-in stockholders' equity Retained earnings 10.8 13.0 Total $ 37.0 Total $ 37.0 a. What is the market debt-to-value ratio of the firm? b. What is University's WACC? Note: For all the requirements, do not round intermediate calculations. Enter your…Bombardier Inc has common stock trading at a price of $15, and a market capitalization of $8 billion. The firm also has preferred stock worth a total of $2 billion, currently trading at $23 per share and paying a dividend of $2.75 per share. The firm's beta is 0.93, the risk-free rate is 3.2%, and the market risk premium is 7%. The firm has $12 billion of debt with a yield to maturity of 5%. If the firm's tax rate is 20%, what is Bombardier's WACC? O A. 7.3% OB. 8.56% O C. 4.12% O D. 7.57% OE. 6.8%
- McCann Catching, Inc. has 3.00 million shares of stock outstanding. The stock currently sells for $12.79 per share. The firm's debt is publicly traded and was recently quoted at 89.00% of face value. It has a total face value of $19.00 million, and it is currently priced to yield 10.00%. The risk free rate is 3.00% and the market risk premium is 8.00%. You've estimated that the firm has a beta of 1.20. The corporate tax rate is 34.00%. The firm is considering a $45.89 million expansion of their production facility. The project has the same risk as the firm overall and will earn $11.00 million per year for 7.00 years. What is the NPV of the expansion? (answer in terms of millions, so 1,000,000 would be 1.0000)Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.6. There are 3 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firm’s tax rate is 21%. BOOK-VALUE BALANCE SHEET (Figures in $ millions) Assets Liabilities and Net Worth Cash and short-term securities $ 1.0 Bonds, coupon = 7%, paid annually(maturity = 10 years, current yield to maturity = 8%) $ 10.0 Accounts receivable 5.0 Preferred stock (par value $10 per share) 3.0 Inventories 9.0 Common stock (par value $0.10) 0.3 Plant and equipment 20.0 Additional paid-in stockholders’ equity 11.7 Retained earnings 10.0 Total $ 35.0 Total $ 35.0 a. What is the market debt-to-value ratio of the firm? b. What is University’s…Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.6. There are 3 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firm's tax rate is 21%. BOOK-VALUE BALANCE SHEET (Figures in $ millions) Assets Liabilities and Net Worth Cash and short-term securities $ 1.0 5.0 Bonds, coupon = 78, paid annually (maturity = 10 years, current yield to maturity = 8%) Preferred stock (par value $10 per share) $10.0 Accounts receivable 3.0 Inventories Common stock (par value $0.10) Additional paid-in stockholders' equity Retained earnings 9.0 0.3 Plant and equipment 20.0 11.7 10.0 $35.0 $35.0 Total Total a. What is the market debt-to-value ratio of the firm? b. What is University's WACC? (For all the requirements, do not round intermediate calculations. Enter your answers as a percent…
- Examine the following book - value balance sheet for University Products Incorporated. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of 0.7. There are 2 million common shares outstanding. The market risk premium is 12%, the risk-free rate is 8%, and the firm's tax rate is 21%. BOOK- VALUE BALANCE SHEET (Figures in $ millions) Assets Liabilities and Net Worth Cash and short- term securities $ 2.0 Bonds, coupon = 5%, paid annually (maturity = 10 years, current yield to maturity = 7% ) $ 10.0 Accounts receivable 3.0 Preferred stock (par value $20 per share) 3.0 Inventories 7.0 Common stock (par value $0.10) 0.2 Plant and equipment 25.0 Additional paid - in stockholders' equity 11.8 Retained earnings 12.0 Total $ 37.0 Total $ 37.0 What is the market debt- to-value ratio of the firm? What is University's WACC?You are given the following information: Stockholders' equity as reported on the firm's balance sheet = $4 billion, price/earnings ratio = 20.5, common shares outstanding = 60 million, and market/book ratio = 1.7. The firm's market value of total debt is $8 billion; the firm has cash and equivalents totaling $320 million; and the firm's EBITDA equals $1 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the firm's EV/EBITDA? Do not round intermediate calculations. Round your answer to two decimal places.S Examine the following book-value balance sheet for University Products Incorporated. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $10 per share and has a beta of 0.9. There are 4 million common shares outstanding. The market risk premium is 8%, the risk-free rate is 4%, and the firm's tax rate is 21%. Assets Cash and short-term securities $ 3.0 Accounts receivable. 3.0 Inventories Plant and equipment Total 7.0 25.0 $ 38.0 a. Market debt-to-value ratio b. WACC BOOK-VALUE BALANCE SHEET (Figures in 5 millions) Liabilities and Net Worth Bonds, coupon 5%, paid annually (maturity 10 years, current yield to maturity = 7%) Preferred stock (par value $20 per share) Common stock (par value $0.10) Additional paid-in stockholders' equity Retained earnings Total a. What is the market debt-to-value ratio of the firm? b. What is University's WACC? Note: For all the requirements, do not round intermediate calculations. Enter your…
- The market value of MCO's equity, preferred stock and debt are $7 million, $2 million, and $13 million, respectively. MCO's equity has a beta of 1.9, the market risk premium is 7%, and the risk - free rate of interest is 3%. MCO's preferred stock pays a dividend of $2.5 each year and trades at a price of $27 per share. MCO's debt trades with a yield to maturity of 8.5%. What is MCO's after-tax weighted average cost of capital (WACC) if its tax rate is 25%? The WACC is closest to: A. 11.76% B. 11.05% C. 9.8% D. 7.98% E. 10.43%The ABC Co. has 1.4 million shares of stock outstanding. The stock currently sells for $20 pershare. The firm’s debt is $4.65 million and the average cost of debt is 11 percent. The risk-freerate is 8 percent, and the market risk premium is 7 percent. You’ve estimated that the companyhas a beta of .74. If the corporate tax rate is 34 percent, what is the WACC of this Company?Show detailed calculationA firm has 1 million shares outstanding with a book value per share of $10 per share. The stock sells for a price of $20 per share. The firm’s bonds have a par value of $8 million and are currently selling at a price of 120 percent of par. What is the appropriate proportion of equity to use in the WACC calculation? 71.4 percent 51.0 percent 55.6 percent 48.0 percent 67.6 percent