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Suppose a firm has 26 million shares of common stock outstanding at a price of $37.6 per share. The firm also has 100,000 bonds outstanding with a current price of $1010.5. The outstanding bonds have yield to maturity 6.7%. The firm's common stock beta is 2.2 and the corporate tax rate is 36%. The expected market return is 15% and the T-bill rate is 4%. What is the WACC for this firm?
Weight of Equity (3 decimals) =

Weight of Debt (3 decimals) =

Cost of Equity (4 decimals) =

After tax Cost of Debt (4 decimals) =

WACC (4 decimals) =

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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Suppose you are given the following information for the Catch-them-all Inc.

Debt: 23,000 bonds outstanding, with a face value of $2,000. The bonds currently trade at 81.125% of par value, and have 30 years to maturity. The coupon rate equals 3%, and the bonds make semi-annual coupon payments.

Common stock: 825,000 shares of common stock outstanding; currently trading for $62.55 per share. The firm just paid a dividend of $3.94 per share, and dividends are expected to grow at 2% per year, forever.

Preferred stock: 150,000 shares of preferred stock outstanding; currently trading for $107.5 per share; pays a $4.82 dividend every year.

Tax rate: 35%

Calculate the before tax cost of debt (Rd), cost of equity capital, capital structure weight of debt, and weighted average cost of capital. (Enter percentages as decimals and round to 4 decimal places)

1.

FarCry Industries, a maker of telecommunications equipment, has 6 million shares of common stock outstanding, 4 million shares of preferred stock outstanding, and 45,000 bonds. Suppose the common shares are selling for $28 per share, the preferred shares are selling for $15.00 per share, and the bonds are selling for 99 percent of par.

What weight should you use for debt in the computation of FarCry’s WACC?

2.

FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $25 per share, the preferred shares sell for $13.50 per share, and the bonds sell for 97 percent of par.

What weight should you use for preferred stock in the computation of FarCry’s WACC?

3.

Suppose that TapDance, Inc.’s, capital structure features 70 percent equity, 30 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 14 percent. Assume the appropriate weighted average tax rate is 34 percent.

What will be TapDance’s WACC? (Round your answer to 2 decimal places.)

WACC %

Burwood Investment Limited has:
1) 8 million shares of common stock outstanding, the price is $32and beta is 1.15. Market risk premium is 10%, T-bills are yielding5%.
2) 0.5 million shares of 6% preferred stock outstanding, the priceis $67.
3) 100,000 of 9% semi-annual bonds outstanding, 15 years tomaturity, and sell for 91% of par. The current yield to maturity onthese bonds is 10.18%p.a.
a) If the applicable tax rate is 35% p.a. what is the capitalstructure of the firm?
b) What is the firm’s WACC?

Please give the calculation process

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