50,000 bonds with a coupon rate of 7 percent and a current price quote of 110; the bonds have 20 years to maturity. 220, 000 zero coupon bonds with a price quote of 18 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons. Preferred stock: 140,000 shares of 5 percent preferred stock with a current price of $80, and a par value of $100. Common stock: 2, 500,000 shares of common stock; the current price is $66, and the beta of the stock is 1.2. Market: The corporate tax rate is 21 percent, the market risk premium is 6 percent, and the risk - free rate is 3 percent. What is the WACC for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

50,000 bonds with a coupon rate of 7 percent and a current price quote of 110; the bonds have 20 years to maturity. 220, 000 zero coupon bonds with a price quote of 18 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons. Preferred stock: 140,000 shares of 5 percent preferred stock with a current price of $80, and a par value of $100. Common stock: 2, 500,000 shares of common stock; the current price is $66, and the beta of the stock is 1.2. Market: The corporate tax rate is 21 percent, the market risk premium is 6 percent, and the risk - free rate is 3 percent. What is the WACC for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter20: Hybrid Financing: Preferred Stock, Warrants, And Convertibles

Section: Chapter Questions

Problem 1P: Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually...

See similar textbooks

Similar questions

Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
PLEASE SHOW CALCULATION AND FORMULA, THANKYOUCompany A has the following:Debt: 50,000 bonds with a coupon rate of 5.7 percent and a current price quote of 106.5; the bonds have 20 years to maturity. 200,000 zero coupon bonds with a price quote of 17.5 and 30 years until maturity. Preferred stock: 125,000 shares of 4 percent preferred stock with a current price of $79, and a par value of $100. Common stock: 2,300,000 shares of common stock; the current price is $65, and the stock beta is 1.20. Market: The corporate tax rate is 40 percent, the market risk premium is 7 percent, and the risk-free rate is 4 percent. a. What is the cost of equity? (0.75) b. What is the cost of debt after tax
The Saunders Investment Bank has the following financing outstanding. Debt: 47,000 bonds with a coupon rate of 5.2 percent and a current price quote of 105.5; the bonds have 16 years to maturity and a par value of $1,000. 16,300 zero coupon bonds with a price quote of 25.3, 25 years until maturity, and a par value of $10,000. Both bonds have semiannual compounding. Preferred stock: 142,000 shares of 3.7 percent preferred stock with a current price of $89 and a par value of $100. Common stock: 2,040,000 shares of common stock; the current price is $79 and the beta of the stock is 1.15. Market: The corporate tax rate is 22 percent, the market risk premium is 7.2 percent, and the risk-free rate is 3.2 percent. What is the WACC for the company?
Consider the following information for Watson Power Company:Debt: 5,500 5.5 percent coupon bonds outstanding, $1,000 par value, 18 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.Common stock: 115,500 shares outstanding, selling for $59 per share; the beta is 1.19.Preferred stock: 19,500 shares of 4.5 percent preferred stock outstanding, currently selling for $108 per share.Market: 6 percent market risk premium and 4.5 percent risk-free rate.Assume the company's tax rate is 31 percent.Find the WACC.
You are given the following information concerning Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 104.50. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 235,000 shares of common stock selling for $64.70 per share. The stock has a beta of .92 and will pay a dividend of $2.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 8,200 shares of 4.60 percent preferred stock selling at $94.20 per share. Market: 11.8 percent expected return, a risk-free rate of 3.70 percent, and a 22 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt % Cost of preferred stock % Cost of equity % Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a…
You are given the following information on Parrothead Enterprises: Debt: 9,400 6.6 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 105. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 245,000 shares of common stock selling for $64.90 per share. The stock has a beta of .94 and will pay a dividend of $3.10 next year. The dividend is expected to grow by 5.4 percent per year indefinitely. Preferred stock: 8,400 shares of 4.7 percent preferred stock selling at $94.40 per share. The par value is $100 per share. Market: 11.6 percent expected return, risk-free rate of 3.8 percent, and a 24 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Consider the following information for Watson Power Company: Debt: 3,500 7 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock: 84,000 shares outstanding, selling for $56 per share; the beta is 1.17. Preferred stock: 11,500 shares of 6.5 percent preferred stock outstanding, currently selling for $108 per share. Market: 8.5 percent market risk premium and 6.5 percent risk - free rate. Assume the company's tax rate is 34 percent. Find the WACC. Multiple Choice 10.87 % 10.47 % 10.37% 11.31 % 10.66%
You are given the following information on Parrothead Enterprises: Debt: 8,500 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 106.75. These bonds pay interest semiannually and have a par value of $2,000. Common stock: 280,000 shares of common stock selling for $65.60 per share. The stock has a beta of 1.06 and will pay a dividend of $3.80 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,100 shares of 4.55 percent preferred stock selling at $95.10 per share. The par value is $100 per share. Market: 10.9 percent expected return, risk-free rate of 4.15 percent, and a 21 percent tax rate. Calculate the company's WACC.
You are given the following information on Parrothead Enterprises: Debt: 9,200 7.3 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 108.5. These bonds pay interest semiannually and have a par value of $2,000. Common stock: 315,000 shares of common stock selling for $66.30 per share. The stock has a beta of 1.08 and will pay a dividend of $4.50 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 9,800 shares of 4.65 percent preferred stock selling at $95.80 per share. The par value is $100 per share. Market: 10.2 percent expected return, risk - free rate of 4.5 percent, and a 23 percent tax rate. Calculate the company's WACC.
You are given the following information concerning Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. Market: 11.7 percent expected return, a risk-free rate of 3.75 percent, and a 23 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
The IPO Investment Bank has the following financing outstanding. Debt: 20,000 bonds with a coupon rate of 12 percent and a current price quote of 110; the bonds have 20 years to maturity. 190, 000 zero coupon bonds with a price quote of 20.5 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons. Preferred stock: 110,000 shares of 10 percent preferred stock with a current price of $85, and a par value of $100. Common stock: 2,200, 000 shares of common stock; the current price is $71, and the beta of the stock is 1.45. Market: The corporate tax rate is 21 percent, the market risk premium is 5 percent, and the risk - free rate is 2 percent. What is the WACC for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You are given the following information on Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share. Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %