1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Alik [6]
3 years ago
13

You are given the following information on Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 yea

rs to maturity and a quoted price of 104.5. These bonds pay interest semi-annually and have a par value of $1,000. 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 4.6 percent preferred stock selling at $94.20 per share. The par value is $100 per share. Market: 11.8 percent expected return, risk-free rate of 3.7 percent, and a 22 percent tax rate. Calculate the company's WACC.
Business
1 answer:
valina [46]3 years ago
7 0

Answer:

8.57%

Explanation:

value of debt = $1,000 x 9,200 x 1.045 = $9,614,000

YTM = {32 + [($1,000 - $1,045)/46]} / [($1,000 + $1,045)/2] = 31.02/ 1,022.50 = 3.034% x 2 = 6.07%

value of common stock = 235,000 x $64.70 = $15,204,500

Re = 3.7% + 0.92(11.8% - 3.7%) = 11.15%

value of preferred stocks = 8,200 x $94.20 = $772,440

cost of preferred stocks = 4.6 / 94.2 = 5.46%

total value = $25,590,940

common stocks = 0.594

debt = 0.376

preferred stocks = 0.03

WACC = (0.594 x 11.15%) + (0.03 x 5.46%) + (0.376 x 6.07% x 0.78) = 6.6231% + 0.1638% + 1.78% = 8.57%

You might be interested in
Suppose that in a year an American worker can produce 100 shirts or 20 computers and a Chinese worker can produce 100 shirts or
Alexeev081 [22]
A ....................
5 0
3 years ago
How do you see your housing needs and goals changing over time?<br> This is an essay question.
Alchen [17]
They could change for many reasons some being:
1. if you're not on a lease the rent can go up at any time only
2. if you are on a lease regardless improvements to your home the landlord can raise it every year.
3. if you have a mortgage w a variable APR your mortgage/ housing needs change monthly
4. your goals would change if maybe you wanted to move closer to your job or you got a new job and you need to move closer
5. maybe if you got married or had kids your housing gold would change.
6. maybe you live in not such a nice neighborhood and you'd like to live in a neighborhood less crime your goals would change
not sure if those are the answers you're looking for but there's so many different reasons that your housing needs and goals could change
4 0
3 years ago
Tammy, a resident of Virginia, is considering purchasing a North Carolina bond that yields 4.6% before tax. She is in the 35% Fe
Agata [3.3K]
I think it would be 4.5 percent
7 0
3 years ago
Patsy Banz owns 220 shares of General Mills Corporation. For the last calendar quarter, General Mills Corporation paid $0.47 a s
Nina [5.8K]

Answer:

The aggregate amount received for the quarter amounts to $103.4

Explanation:

The computation of aggregate amount received for the quarter is as follows:

Aggregate amount received for the quarter = Number of Shares owned × Price Paid per share

where

Number of Shares owned is 220 shares

Price paid per share is $0.47 per share

Putting the values above:

= 220 × $0.47

= $103.4

5 0
3 years ago
The share of ________ by the top firms is known as the concentration ratio.
Dominik [7]
The share of markets by the top firms is known as the concentration ratio
4 0
3 years ago
Other questions:
  • Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shif
    11·1 answer
  • Steve Jobs was a strong, charismatic leader who co-founded Apple and is credited with much of the success of the company. Some b
    11·1 answer
  • A particular forecasting model was used to forecast a six-month period. Here are the forecasts and actual demands that resulted:
    8·1 answer
  • Moki Hunt recently purchased Swift Waters Adventures, a kayaking and canoeing rental business near the Salt River in Arizona. Sw
    11·1 answer
  • Choose the correct statement.
    14·1 answer
  • 13. A firm hires its labor in a perfectly competitive factor (or resource) market and sells its product in a perfectly competiti
    11·1 answer
  • When Matt has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Matt's income increases to $3,00
    6·1 answer
  • Scientific knowledge is ______(a)________ and subject to change based on new______(b)_______ or discoveries
    8·1 answer
  • Which missouri organization offers mediation and arbitration in handling commission disputes between members?
    13·1 answer
  • At a meeting held during passover, there are two buffet lines. one has matzo and no shrimp and the other has bread and shrimp. t
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!