None Lingenburger Cheese Corporation has 6.4 million shares of common stock outstanding, 225,000 shares of 3.7 percent preferredstock outstanding, par value of $100; and 110,000 bonds with a semiannual coupon rate of 5.4 percent outstanding, par value$1,000 each. The common stock currently sells for $72 per share and has a beta of 1.20, the preferred stock has a par value of$100 and currently sells for $84 per share, and the bonds have 18 years to maturity and sell for 108 percent of par. The marketrisk premium is 7.2 percent, T-bills are yielding 3.2 percent, and the company's tax rate is 24 percent.a. What is the firm's market value capital structure?Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should thefirm use to discount the project's cash flows?Note: Do not round intermediate calculations enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.a. DebtPreferred stockEquityb. Discount rate%

Market Value Capital StructureThe market value of Lingenburger Cheese Corporation's capital…

Answered: Lingenburger Cheese Corporation has 6.4…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lingenburger Cheese Corporation has 7.1 million shares of common stock outstanding, 255,000 shares of 4.3 percent preferred stock outstanding, par value of $100; and 140,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $1,000 each. The common stock currently sells for $66 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $90 per share, and the bonds have 19 years to maturity and sell for 108 percent of par. The market risk premium is 7.6 percent. T-bills are yielding 2.9 percent, and the company's tax rate is 25 percent. a. What is the firm's market value capital structure? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. 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? Note: Do not round intermediate calculations enter your…
Lingenburger Cheese Corporation has 6.1 million shares of common stock outstanding, 210,000 shares of 3.4 percent preferred stock outstanding, par value of $100; and 95,000 bonds with a semiannual coupon rate of 5.1 percent outstanding, par value $1,000 each. The common stock currently sells for $75 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $81 per share, and the bonds have 15 years to maturity and sell for 105 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 2.8 percent, and the company's tax rate is 21 percent. a. What are the firm's market value capital structure weights? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. 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? Note: Do not round intermediate calculations…
Lingenburger Cheese Corporation has 6.2 million shares of common stock outstanding, 215,000 shares of 3.5 percent preferred stock outstanding, par value of $100; and 100,000 bonds with a semiannual coupon rate of 5.2 percent outstanding, par value $1,000 each. The common stock currently sells for $74 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $82 per share, and the bonds have 16 years to maturity and sell for 106 percent of par. The market risk premium is 6.9 percent, T-bills are yielding 2.9 percent, and the company's tax rate is 22 percent. a. What is the firm's market value capital structure? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g...1616. 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? Note: Do not round intermediate calculations enter your…
Lingenburger Cheese Corporation has 7.3 million shares of common stock outstanding, 265,000 shares of 4.5 percent preferred stock outstanding, par value of $100; and 150,000 bonds with a semiannual coupon rate of 5.4 percent outstanding, par value $2,000 each. The common stock currently sells for $64 per share and has a beta of 1.20, the preferred stock has a par value of $100 and currently sells for $92 per share, and the bonds have 16 years to maturity and sell for 106 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3.2 percent, and the company's tax rate is 22 percent. a. What is the firm's market value capital structure? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. 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? Note: Do not round intermediate calculations enter your…
es Lingenburger Cheese Corporation has 6.6 million shares of common stock outstanding, 235,000 shares of 3.9 percent preferred stock outstanding, par value of $100; and 120,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $1,000 each. The common stock currently sells for $70 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $86 per share, and the bonds have 15 years to maturity and sell for 104 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3.4 percent, and the company's tax rate is 21 percent. a. What are the firm's market value capital structure weights? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. 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? Note: Do not round intermediate calculations…
Lingenburger Cheese Corporation has 7.1 million shares of common stock outstanding, 255,000 shares of 4.3 percent preferred stock outstanding, and 140,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $1,000 each. The common stock currently sells for $66 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $90 per share, and the bonds have 19 years to maturity and sell for 108 percent of par. The market risk premium is 7.6 percent, T-bills are yielding 2.9 percent, and the company's tax rate is 25 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., .1616.) 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…
Lingenburger Cheese Corporation has 8.3 million shares of common stock outstanding, 305,000 shares of 3.9 percent preferred stock outstanding, and 190,000 bonds with a semiannual coupon rate of 5.2 percent outstanding, par value $2,000 each. The common stock currently sells for $56 per share and has a beta of 1.20, the preferred stock has a par value of $100 and currently sells for $100 per share, and the bonds have 19 years to maturity and sell for 108 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 3.2 percent, and the company’s tax rate is 25 percent. a. What is the firm’s market value capital structure? (Do not round intermediate calculations and
Lingenburger Cheese Corporation has 8.3 million shares of common stock outstanding, 305,000 shares of 3.9 percent preferred stock outstanding, and 190,000 bonds with a semiannual coupon rate of 5.2 percent outstanding, par value $2,000 each. The common stock currently sells for $56 per share and has a beta of 1.20, the preferred stock has a par value of $100 and currently sells for $100 per share, and the bonds have 19 years to maturity and sell for 108 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 3.2 percent, and the company's tax rate is 25 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., .1616.) 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…
Lingenburger Cheese Corporation has 6.6 million shares of common stock outstanding, 235,000 shares of 3.9 percent preferred stock outstanding, and 120,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $1,000 each. The common stock currently sells for $70 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $86 per share, and the bonds have 15 years to maturity and sell for 104 percent of par. The market risk premium is 7.4 percent, T-bills are ylelding 3.4 percent, and the company's tax rate is 21 percent. a. What is the firm's market value capital structure? (Do not round Intermediate calculations and round your answers to 4 declmal places, e.g., 1616.) 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 Intermedlate calculatlons enter your answer as a percent rounded to…
Titan Mining Corporation has 6.1 million shares of common stock outstanding, 210,000 shares of 3.4 percent preferred stock outstanding, and 95,000 bonds with a semiannual coupon rate of 5.1 percent outstanding, par value $1,000 each. The common stock currently sells for $75 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $81 per share, and the bonds have 15 years to maturity and sell for 105 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 2.8 percent, and the company's tax rate is 21 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., 1616.) 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…
Titan Mining Corporation has 6.1 million shares of common stock outstanding, 210,000 shares of 3.4 percent preferred stock outstanding, and 95,000 bonds with a semiannual coupon rate of 5.1 percent outstanding, par value $1,000 each. The common stock currently sells for $75 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $81 per share, and the bonds have 15 years to maturity and sell for 105 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 2.8 percent, and the company's tax rate is 21 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., .1616.) 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…
Titan Mining Corporation has 6.3 million shares of common stock outstanding, 220,000 shares of 3.6 percent preferred stock outstanding, and 105,000 bonds with a semiannual coupon rate of 5.3 percent outstanding, par value $1,000 each. The common stock currently sells for $73 per share and has a beta of 1.15, the preferred stock has a par value of $100 and currently sells for $83 per share, and the bonds have 17 years to maturity and sell for 107 percent of par. The market risk premium is 7.1 percent, T-bills are yielding 3.1 percent, and the company’s tax rate is 23 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., .1616.) 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…

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