FarCry Industries, a maker of telecommunications equipment, has 2million shares of common stock outstanding, 1 million shares of preferredstock outstanding, and 10,0000 bonds. Suppose the common shares areselling for $27 per share, the preferred shares are selling for $14.50 pershare, and the bonds are selling for 98 percent of par.What would be the weight used for equity in the computation of FarCry'sWACC? (Round your answer to 2 decimal places. Write your answer inpercentage.)

Weighted average cost of capital (WACC) refers to the joint cost of company's capital from all the…

Answered: What would be the weight used for…

What would be the weight used for equity in the computation of FarCry's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter26: Mergers And Corporate Control

Section: Chapter Questions

Problem 7MC

See similar textbooks

Related questions

Q: Find the present value of an annuity of $6000 paid at the end of each 6-month period for 6 years if…

A: Semi annual payment (P) = $6000 Period = 6 Years Semi annual periods (n) = 6*2 = 12 Interest rate =…

Q: Find the monthly payment for the loan. (Round your answer to the nearest cent.) $500 loan for 12…

A: The monthly payment for the loan can be calculated with the help of present value of annuity…

Q: The city of New Haven is trying to determine how big its capital budget needs to be to pay for the…

A: Initial cost (C) = $3.5 million Maintenance cost (M) = $330000 every 7 years r = 8%

Q: Falk Enterprises borrowed $8,500 at 6.25% compounded semiannually to purchase a new forklift. The…

A: The question is asking about computation of amortization schedule. Amortization schedule is…

Q: If you are willing to loan someone $100 and expect to be paid back $200 and earn 12% on your…

A: Given Loan amount is $100 Amount to be paid back is $200 Rate of return is 12%

Q: John had 2000 € on his account in the end of 2017. He wants to have 10 000 € by the end of year…

A: Present Value(PV) € 2,000.00 Future Value(FV) €…

Q: Due to growing demand for computer software, the Perry Company has had a very successful year and…

A: GIVEN ÷ EPS = $5.50 Price/earning ratio = 12 FORMULA Share price = EPS × price/earning ratio

Q: What single sum at t=6 is equivalent at 7% compounded annually to the following cash flow profile ?…

A: Interest Rate = 7%

Q: Ruhy's Corporation is considering investing in Malaysian security market. The company need to choose…

A: Given: Probability(P) Security Q Security P 10% 15% 12% 40% 8% 10% 50% 6% 7%

Q: shareholders be the owners

A: A firm refers to a profit-making organization such as a sole proprietorship, partnership, company,…

Q: AJ is a 30% partner in the Trane partnership, a calendar year end entity. On January 1, AJ has an…

A: When two or more people come together to start a business it is known as a partnership. A…

Q: A $3,000 bond with a 2.5% coupon compounded semi-annually is currently priced to yield 9% with 18…

A: The yield to maturity of a bond is the total rate of return gained after all interest payments have…

Q: Use a calculator to evaluate the present value of an annuity formula for the values of the…

A: An annuity is a contract, usually by retirement agencies, that take a lump sum amount and pay back a…

Q: Kyle invests in an account earning 4.5% interest compounded continuously. How long will it take to…

A: Investment (PV) = 100 (Assumed) Required future value (FV) = 100*2 = 200 Interest rate (r) = 4.50%…

Q: of the following is correct? a. Call premium rises as a bond nears its maturity date b. The YTM of…

A: The bonds carry the annual coupon each year to be paid and but the price of bond depends on the…

Q: A highway bridge is being considered for replacement. The new bridge would cost $X and would last…

A: The maximum acceptable price would be the cost of existing bridge and also the benefit from the new…

Q: man loans P112,735 on March 9, 2010 and promise to pay the amount on July 17, 2014 at simple…

A: In the exact simple interest we assume that there are 365 days in year and in ordinary simple…

Q: Momo’s Candy Inc.’s earnings before interest and taxes (EBIT) was $12 million. Assuming Momo’s…

A: NOPAT is calculated as EBIT less taxes on EBIT

Q: ant to buy a used car but don't have enough money to purchase it outright. Your parents suggest that…

A: There are many ways to get loan for the car and we can choose the best loan using the period and…

Q: To raise $5,000,000 to expand into new markets, a very successful laptop manufacturing company…

A: Given: Face Value FV: $5000000 Annual coupon rate = 7% Periodic/Semi-annual coupon = 5000000*7%/2 =…

Q: 8. How much do you need to save at the end of each year to receive 100 million in 10 years? The…

A: Future value required (FV) = 100,000,000 Number of annual savings (n) = 10 Interest rate (r) = 10%

Q: 1.Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: Minu deposits $950 at the end of each quarter for 6 years in an account that earns 1.8% per year…

A: As the number of compounding period increase than the effective interest rate increases and more…

Q: State the concepts in your own words. 1. Privatization 2. Free Trade 3. Flexible Labor Market

A: Privatization: Privatization refers to the process by which a piece of property or a business is…

Q: Lena, a student, receives a monthly allowance of $100, which she spends solely on books and bottles…

A: Given,

Q: You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend…

A: Required rate of return(rs) = Risk-free rate + Beta(Market risk premium) Required rate of return(rs)…

Q: Using the Rule of 72, estimate the annual interest rate required to turn $1000 into $2000 in…

A: The rule of 72 is used to calculate the number of years required to double an investment or the…

Q: 1.Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: Yields: On April 1, 2022, the prices of 1-year, 2-year, and 3-year zero coupon US Treasury bonds…

A: Here, Face Value is 100 Price of one year treasury bond is $98.2318 Price of two year treasury bond…

Q: An Omani businessman has just completed transactions in UAE. He is now holding AED 880,000 and…

A: A bid rate is a rate a forex dealer is willing to pay to buy the base currency. An ask rate is a…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: Market Price $ 500.00 Dividend in year 1 4 Growth Rate 9% Total number of Shares…

Q: In 10mins I will Thumbs-

A: Since we already entered into forward contract on 15 December, so we already lock the price for…

Q: Using the present value tables, which project will Ivanhoe choose? (Round answers to 3 decimal…

A: Profitability Index: The profitability index is a measure of an investment or project's…

Q: Sam is negotiating to purchase an annuity of $50 000 p.a. for 10 years. Funds currently earn 6% p.a.…

A: Present value of annuity due= (PMT/rate)*(1-(1+rate)^-Years)*(1+Rate) PMT = amount of annuity rate =…

Q: whether capital generated in the industrialized countries is finding its way to and from emerging…

A: An economy is a large set of interrelated production, consumption, and exchange activities that help…

Q: Explain the role of each phase of the funding journey for the entrepreneur? For example, what role…

A: A for-profit firm or company is known as an enterprise, however it is most typically linked with…

Q: (8) Consider projects A and B with the following forecasted net present values sensitive to the…

A: Here, Scenario I (p=0.3) II (p=0.7) A (mil.Lei) 3 4 B (mil.Lei) 2 6

Q: Rose Garden’s is also considering selling preferred stock that pays dividends of $2.00 and has a…

A: Annual stock dividend (D) = $2.00 Flotation cost (F) = $10 Required rate of return (r) = 7% Tax rate…

Q: following table contains data to calculate forward rates using pure expectations theory. a) Find the…

A: Solved in excel using forward rate formulas

Q: Calculate the Mean value

A: PERT technique refers to the techniques which are used to simplify the scheduling and planning of…

Q: Which of the following techniques allow firms to gain market access in a new market? Select one:…

A: Market entry strategies: a technique for determining whether or not to enter a new market…

Q: The present value of Alternative 1 is S. (Round the final answer to the nearest dollar as needed.…

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: The risk-free rate is 3 percent, the expected return on the PSEi is 13 percent, and its standard…

A: Here, Risk Free Rate is 3% Expected Return of Market is 13% Standard Deviation of Market is 23%…

Q: Explain ONE cultural or economic development in the late twentieth century that would explain…

A: Economic development is the creation of wealth that realizes the interests of the community. More…

Q: Two mutually exclusive projects are under consideration. Year Project A Project B -$5,000 -$10,000 1…

Q: Regulation of Deposit Insurance rue or False: Prior to 1991, all U.S. banks pald the same rate on…

A: Given,

Q: If the investment rate is 12%, the borrowing rate is 15%, and the MARR is 14%, what is the rate of…

A: The total deficit or surplus of an asset over a specified time period, calculated as a percentage of…

Q: What is the monthly payment for a home costing $475,000 with a 20% down payment and the balance…

A: Given: Cost of home = $475000 Down payment = 20% Number of years = 30 Number of months "n" = 30*12 =…

Q: Your annual contribution should be $ (Round to the nearest cent.)

A: Present Value of Annuity: It represents the present worth of the future stream of cash flows and is…

Q: of the VLN, every installment payment Group of answer choices A. Reduces the amount you owe on the…

A: Amortization: Amortization means systematic write off the loan balance over the period of loan. At…

Question

FarCry Industries, a maker of telecommunications equipment, has 2
million shares of common stock outstanding, 1 million shares of preferred
stock outstanding, and 10,0000 bonds. Suppose the common shares are
selling for $27 per share, the preferred shares are selling for $14.50 per
share, and the bonds are selling for 98 percent of par.
What would be the weight used for equity in the computation of FarCry's
WACC? (Round your answer to 2 decimal places. Write your answer in
percentage.)

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid short-term investments. IWT’s value of operations is estimated to be about $1,937.5 million; it has $387.5 million in debt and zero preferred stock. As mentioned previously, IWT has 100 million shares of stock outstanding. Assume that IWT has not yet made the distribution. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Now suppose that IWT has just made the $50 million distribution in the form of dividends. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Suppose instead that IWT has just made the $50 million distribution in the form of a stock repurchase. Now what is IWT’s intrinsic value of equity? How many shares did IWT repurchase? How many shares remained outstanding after the repurchase? What is its intrinsic stock price per share after the repurchase?
Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the market price per share for Rebert is 51.50. Required: 1. Compute the dollar amount of preferred dividends. 2. Compute the number of common shares. 3. Compute earnings per share. (Note: Round to two decimals.) 4. Compute the price-earnings ratio. (Note: Round to the nearest whole number.)
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $27 per share, the preferred shares are selling for $14.50 per share, and the bonds are selling for 98 percent of par.What would be the weight used for equity in the computation of FarCry’s WACC? (Round your answer to 2 decimal places.)
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $27 per share, the preferred shares sell for $14.50 per share, and the bonds sell for 98 percent of par.What weight should you use for preferred stock in the computation of FarCry’s WACC?
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 sell for $28 per share, the preferred shares sell for $15.00 per share, and the bonds sell for 99 percent of par. What weight should you use for preferred stock in the computation of FarCry’s WACC? (Round your answer to 2 decimal places.)
FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $26 per share, the preferred shares sell for $14.00 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? (Round your answer to 2 decimal places.)
Bill's Boards has 6.5 million shares of common stock outstanding, 5.5 million shares of preferred stock outstanding, and 35.00 thousand bonds. If the common shares are selling for $29.60 per share, the preferred share are selling for $18.50 per share, and the bonds are selling for 95.85 percent of par, what would be the weight used for equity in the computation of Bill's WACC?