Explore BrainMass

Explore BrainMass

    What are the total market value of the firm's stock

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    ABC is currently in the following situation:
    EBIT = $4.7 million
    Tax Rate = .40
    D= $2 million
    rd=.10
    RS=.15
    Shares Outstanding = 600,000
    Stack Price =$30

    The debt is perpetual and all earning 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?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:09 pm ad1c9bdddf
    https://brainmass.com/business/weighted-average-cost-of-capital/calculating-market-value-weighted-average-cost-capital-218274

    Solution Preview

    ABC is currently in the following situation:
    EBIT = $4.7 million
    Tax Rate = .40
    D= $2 million
    rd=.10
    RS=.15
    Shares Outstanding = 600,000
    Stock Price =$30

    The debt is ...

    Solution Summary

    This solution is comprised of a detailed explanation on how to calculate the total market value of the firm's stock, the firm's total market value, and firm's weighted average cost of capital.

    $2.19

    ADVERTISEMENT