Ahmed Company has 8.5 million shares of common stock outstanding, 250,000 shares of 5 percent preferred stock outstanding, and 135,000 7.5 percent semiannual bonds outstanding, par value $5,000 each. The common stock currently sells for $34 per share (Par value= $10) and has a beta of 1.25, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 4 percent, and Ahmed Company tax rate is 36 percent. a. What is the firm's market value capital structure? b. If Ahmed Company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? If we use debt 35%, preferred stock 15% and common stock 50%, what will be the discount rate by assuming same cost of each financing? n is
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- Ahmed Company has 8.5 million shares of common stock outstanding, 250,000 shares of 5 percentpreferred stock outstanding, and 135,000 7.5 percent semiannual bonds outstanding, par value $5,000each. The common stock currently sells for $34 per share (Par value= $10) and has a beta of 1.25, thepreferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for114 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 4 percent, and AhmedCompany tax rate is 36 percent.a. What is the firm’s market value capital structure?b. If Ahmed Company is evaluating a new investment project that has the same risk as the firm’s typicalproject, what rate should the firm use to discount the project’s cash flows? If we use debt 35%, preferredstock 15% and common stock 50%, what will be the discount rate by assuming same cost of eachfinancing?Hankins Corp has 5.4 million shares of common stock outstanding; 290,000 shares of 5.2% preferred stock outstanding, with a par value of $100; and 125,000, 5.7 semiannual bonds outstanding with a par value 1000 each. The common stock currently sells for $72 per share and has a beta of 1.13, The preferred stock currently sells for $103 per share, and the bonds have a 20 year to maturity and self worth. 103 percent of par. The market risk premium is 6.8%, T-bills are yielding 4.3%, and the firm's tax rate is 23%. A.What is the firm's market capital structure? B. If the firm is evaluating a new investment project that has the same risk, as the firm's typical project, what rate should the firm used to discount the project's cash flow? pls type in computer. Thanks!Bombay Inc has 8.5 million shares of common stock outstanding, 250,000shares of 5% preferred stock outstanding, and 135,000 7.5% semi-annualbonds outstanding, par value $1000 EACH. The common stock currently sellsfor $34 per share and has a beta of 1.25, the preferred stock currently sells for$91 per share, and the bonds have 15 years to maturity and sell for 114% ofpar. The market risk premium is 7.5%, T-bills are yielding 4%, and thecompany’s tax rate is 35%.a) Calculate the firm’s market value capital structure.b) Calculate the company WACCc) If Bombay Inc generates a 7.5% with this capital, is Bombay Incdestroying or adding value discuss.
- The Nile Corporation has 9.9 million shares of common stock outstanding and 430,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $47 per share and has a beta of 1.45. The bonds have 20 years to maturity and sell for 118 percent of par. The market risk premium is 8.7 percent, T-bills are yielding 5 percent, and the company's tax rate is 24 percent a. What is the firm's market value capital structure? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Debt Equity b. Discount rate 0.5218 0.4782 6.95 %JS Corporation has 9 million shares of common stock outstanding, 250,000 shares of RM6 annual dividend preferred stock outstanding, and 105,000 of 7.5% semi-annual bond outstanding. The common stock is currently sells for RM34 per share and has a beta of 1.25, the preferred stock currently sells for RM91 per share, and the bonds have 15 years to maturity and sell for 93% of par. The market risk premium is 8.5%, T-bills are yielding 5%, and corporate tax rate is 35%. Calculate the cost of debt and Weighted Average Cost of Capital (WACC).The Pharoah Products Co. currently has debt with a market value of $250 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) that have a maturity of 15 years and are currently priced at $1,055.90 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $15 per share. The preferred shares pay an annual dividend of $1.20. Pharoah also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 6 percent per year forever. If Pharoah is subject to a 28 percent marginal tax rate. Calculate the appropriate cost of capital for a new project that is financed with the same proportion of debt, preferred shares, and common shares as the firm's current capital structure. Assume that the project has the same degree of systematic risk as the average project that the firm is…
- The Ivanhoe Products Co. currently has debt with a market value of $250 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) that have a maturity of 15 years and are currently priced at $1423.92 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $15.00 per share. The preferred shares pay an annual dividend of $1.20. Ivanhoe also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 4 percent per year forever. If Ivanhoe is subject to a 28 percent marginal tax rate. Calculate the weights for debt, common equity, and preferred equity. (Round final answers to 4 decimal places)Titan Corporation has 9.6 million shares of common stock outstanding and 400,000 5.7 percent semiannual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.2; the bonds have 20 years to maturity and sell for 115 percent of par. The market risk premium is 8.4 percent, T-bills are yielding 4 percent, and the company's tax rate is 21 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 460,000,000.0000 > 422,400,000.0000 > a. Debt a. Equity b. Discount rate 8.66 %The Sandhill Products Co. currently has debt with a market value of $250 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,418.61 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $14 per share. The preferred shares pay an annual dividend of $1.20. Sandhill also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 4 percent per year forever. If Sandhill is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? Calculate the weights for debt, common equity, and preferred equity. (Round intermediate calculations and final answers to 4 decimal places, e.g. 1.2514.) Debt Preferred equity Common equity
- The Imaginary Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9% coupon bonds(semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $12.00 per share. The preferred shares pay an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5% per year forever. If Imaginary is subject to a 40% marginal tax rate, then what is the firm's weighted average cost of capital?The Cullumber Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,429.26 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $20 per share. The preferred shares pay an annual dividend of $1.20. Cullumber also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 6 percent per year forever. If Cullumber is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? Calculate the weights for debt, common equity, and preferred equity. (Round intermediate calculations and final answers to 4 decimal places, e.g. 1.2514.) Debt Preferred equity Common equityTitan Mining Corporation has 15 million shares of common stock outstanding, 1,000,000 shares of 10 percent preferred stock outstanding. Titan Mining also has 220,000 bonds outstanding with par value $1,000 each and the bonds have 18 years to maturity. The bond currently sell for 90 percent of par and has cost of debt before-tax of 12 percent. The common stock currently sells for $35 per share and has a beta of 1.25, the preferred stock currently sells for $90 per share,. The market risk premium is 12 percent, T-bills are yielding 7 percent, and the firm's tax rate is 34 percent. What is the corporation weighted average cost of capital?