Friday
July 25, 2014

Homework Help: Finance ( Need help )

Posted by Lindsey on Monday, August 3, 2009 at 8:34pm.

Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $21.00 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs.
The answer I came up with is 2.16% but I don't know if I'm right.

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Finance - Which of the following statements is CORRECT? a. Two bonds have the ...
Finance - Which of the following statements is CORRECT? a. Two bonds have the ...
Finance - Which of the following statements about the relationship between yield...
finance - Adams Enterprises’ noncallable bonds currently sell for $1,120. They ...
financial managemnt - 3. CDL Inc. currently has a $10 million bond issue ...
finance - AAA has only stock and bonds in its capital structure. Balance sheet ...
finance - Peyton’s Colt Farm issued a 30-year, 7.2 percent semiannual bond 6 ...
finance - Tangshan Mining is considering issuing long-term debt. The debt would ...
FINANCE - Current yield and yield to maturity A bond has a $1,000 par value, 10 ...
math/finance - Assume that you are considering the purchase of a 30-year, ...

Search
Members