Week 4 assignment | Management homework help

 

Within the Week 4 Assignment Forum, review and discuss Weighted Average Cost of Capital (WACC) concepts as follows:

Don't use plagiarized sources. Get Your Custom Essay on
Week 4 assignment | Management homework help
From as low as $5/Page
Order Essay

When creating your initial post, assume you are the CFO of Hankins Corporation. Given the key financial data below, perform a detailed and thorough financial analysis (show and explain all calculations) that includes the following:

  1. Describe the firm’s market value capital structure:
    1. What is the market value for each type of financing used by the firm: equity, preferred stock, and debt?
    2. What is the total market value for Hankins Corporation?
    3. What are the respective market value weights for each component of the firm’s financing (equity, preferred stock, and debt)?
  2. 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 use to discount the project’s cash flows? Hint: the firm’s WACC is the appropriate discount rate. Compute Hankins’ WACC:
    1. What is the cost of equity using CAPM?
    2. If the YTM of the bonds is 5.93%, and YTM represents the cost of debt, what is the after-tax cost of this debt?
    3. What is the cost of the firm’s preferred stock?
    4. Based on this information, what is the WACC for Hankins Corporation?

Key financial data for Hankins Corporation:

  • Common stock outstanding = 5.4 million shares; market value = $64/share; beta = 1.13
  • 5.6% Preferred stock outstanding = 290,000 shares issued with par value = $100 each.  Current market value of preferred stock = $103/share. 
  • 6.7% semi-annual bonds outstanding = 125,000 bonds issued with par value = $1,000 each; market value is 109% of par; all bonds mature in 20 years.
  • Market risk premium = 6.8%
  • T-bills current yield = 4.3%
  • Corporate tax rate = 34%

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Confirm Eligibility