The company had pre-tax net income of $25mm last year and paid taxes of $10mm. The company has $900mm of total liabilities, $100mm of accounts payable, and $500mm of long-term debt. The company has 120mm shares authorized, 45mm shares issued, and 5mm shares of treasury stock. The stock now trades at $35 per share. the 10 year Treasury rate is 3% The pre-tax cost of debt is 6% The company’s Beta is 2 and the market return for equities is 8%. What is the WACC?
The company had pre-tax net income of $25mm last year and paid taxes of $10mm. The company has $900mm of total liabilities, $100mm of accounts payable, and $500mm of long-term debt. The company has 120mm shares authorized, 45mm shares issued, and 5mm shares of treasury stock. The stock now trades at $35 per share. the 10 year Treasury rate is 3% The pre-tax cost of debt is 6% The company’s Beta is 2 and the market return for equities is 8%. What is the WACC?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
- The company had pre-tax net income of $25mm last year and paid taxes of $10mm.
- The company has $900mm of total liabilities, $100mm of accounts payable, and $500mm of long-term debt.
- The company has 120mm shares authorized, 45mm shares issued, and 5mm shares of
treasury stock . The stock now trades at $35 per share. - the 10 year Treasury rate is 3%
- The pre-tax cost of debt is 6%
- The company’s Beta is 2 and the market
return for equities is 8%.
What is the WACC?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education