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Category > Business & Finance Posted 11 May 2017 My Price 8.00

Organic Produce Corporation has 9 million shares of common stock outstanding

Organic Produce Corporation has 9 million shares of common stock outstanding, 650,000 shares of 7 percent preferred stock outstanding, and 190,000 of 8.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.50 per share and has a beta of 1.35, the preferred stock currently sells for $106.50 per share, and the bonds have 15 years to maturity and sell for 88.5 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 5.5 percent, and the firmAc€?cs tax rate is 34 percent.
Required:

(a)

What is the firm's market value capital structure? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)

  

  Market value weight of debt _____________?   
  Market value weight of preferred stock _______________?   
  Market value weight of equity _________________?   

(b)

If the firm is evaluating a new investment project that has the same risk as the firmAc€?cs typical project, what rate should the firm use to discount the projectAc€?cs cash flows? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
  Weighted average cost of capital___________? %

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Status NEW Posted 11 May 2017 02:05 PM My Price 8.00

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