FIN 305 Final: FIN305 Class 72
Document Summary
A firm"s wacc will likely change if: the company"s tax rate changes, interest rates change, stockholders get more risk averse, each of the above would likely change the wacc. Suppose you were considering purchasing a security that entitles you to receive payments for three years. You will receive /year for the first two years, and. Assume your required rate of return for this type of security is. Suppose microsoft issues a 7% coupon bond with semiannual payments, a maturity of 20 years and a face value of ,000. Assume the appropriate market rate of return is 8%: . 42, . 82, . 04, . 40. For semiannual, coupon interest payments, maturity, and required rate of return each must be divided by 2. Consider the example above (semiannual coupon bond with 20 years to maturity, You would have to buy at a discount so that your roi would yield 10% or more.
