Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 1029% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm places) c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax (Please round up the result at 3 decimal system.

Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 1029% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm places) c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax (Please round up the result at 3 decimal system.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 14P

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Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate ofreturn of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of$58 a share. The preferred share has a par value of $100. The outstanding bond has a total face valueof $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%.Required:a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimalplaces)c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical taxsystem Answer in word
Masterson, Inc., has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a coupon rate of 6 percent, and sells for 98 percent of par. The second issue has a face value of $75 million, has a coupon rate of 5 percent, and sells for 110 percent of par. The first issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) c. Which are more relevant, the book or market value weights?
Masterson, Inc., has 8 million shares of common stock outstanding. The current share price is $82, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $135 million, has a coupon rate of 7 percent, and sells for 93 percent of par. The second issue has a face value of $120 million, has a coupon rate of 6 percent, and sells for 102 percent of par. The first issue matures in 25 years, the second in 9 years. Both bonds make semiannual coupon payments. What are the company's capital structure weights on a book value basis? Equity/Value ___________ Debt/Value ____________ What are the company's capital structure weights on a market value basis? Equity/Value __________ Debt/Value ___________
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of$58 a share. The preferred share has a par value of $100. The outstanding bond has a total face valueo of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%.Required:a) Calculate the total market value of the firm.b) Calculate the capital structure of the firm. (Please round up the result at 3 decimalplaces)c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical taxsystem.
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Please answer:a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimal places)c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system.
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $77, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 97 percent of par. The second issue has a face value of $30 million, a coupon rate of 7 percent, and sells for 105 percent of par. The first issue matures in 21 years, the second in 4 years. Suppose the most recent dividend was $4.90 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC _________%
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system.
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimal places) c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system. Please dont use excel sheets and excel workings for the answer.
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%.Required:a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimalplaces)c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system. Please provide all subheading answer