Determine weighting of shares done and debt with book values
When computing the WACC, is the weighting of the shares done and the debt with book values of debt and shareholder’s equity or along with market values?
Expert
Neither market values nor book values are used. The values that have to be used are those resulting as of the valuation.
Could we suppose that, as we cannot predict the future evolution of the value of shares, a good estimation would be to consider this constant during the next five years?
Kevin is interested in buying a 5-year bond which pays a coupon of 10 % on a semi-annual basis. The present market rate for similar bonds is 8.8 %. What must be the present price of this bond? (Round to the closest dollar.) (a) $1,048 (b) $965 (c) $1,099&n
AB Corporation has 3 million shares of common stock selling at $19 each. It also contains $25 million in bonds with coupon rate of 8%, selling at par. AB requires $10 million in new capital that it can raise by selling stock at $18, or bonds at 9% interest. The expect
Liquidity Ratios: Such ratios comprise the Current Ratio and the Quick Ratio or the acid test ratio. Liquidity ratios demonstrate the Liquid position of a company in the short term that is the capability of a firm to pay its obligations in short term.
Is this possible to use different WACCs within order to discount each year’s flows? In which cases?
When you take out an $8,000 car loan that calls for 48 monthly payments of $225 each, then what is the APR of loan?
Atlanta Company stock is predicted to follow an exponential growth rate. The relationship among the current stock price P0, future price PT after time T, and continuously compounded rate of the return r, is: PT = P0eγT. The stock doesn’t pay any
Which determines the shape of the term structure of Interest rates?
Which one model was great breakthrough for side of finance theory?
Solve for the stated annual rate, r equal to the continuously compounded rate of return implicit in turning $1 at the end of 1925 (beginning of 1926) into these reported valued from RWJ9 in 2008 Figure below: 1. Determine the state
18,76,764
1928698 Asked
3,689
Active Tutors
1426655
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!