Weighted Average Cost of Capital Assignment | Homework For You
Im not certain if this is correct. Please help
Problem 12-12 Finding the WACC Makai Metals Corporation has 8.7 million shares of common stock outstanding and 310,000 6 percent semiannual bonds outstanding. par value $1.000 each. The common stock currently sells for $35 per share and has a beta of 1.35, and the bonds have 20 years to maturity and sell for 116 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 5 percent, and the companys tax rate is 30 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., 32.1816.) Market value 45.85 Debt Equity
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. Enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) Discount rate 8.72 %. Get Finance homework help today