Determining total market value of firm stock


ABC is currently in this situation. (1) EBIT = $4.7 million; (2) tax rate = .40; (3) D=$2 million; (4) rd = .10; (5) rs = .15; (6) shares outstanding = 600,000; and stock price = $30. The debt is perpetual and all earnings are paid out as dividends. (a) What are the total market value of the firm's stock and the firm's total market value? (b) What is the firm's weighted average cost of capital?

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Finance Basics: Determining total market value of firm stock
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