Lingenburger Cheese Corporation has 7.3 million shares of common stock outstanding, outstanding, par value of $100; and 150,000 bonds with a semiannual coupon rate of 5.4 percent outstanding, par value $2,000 ea 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 current sells for $92 per share, and the bonds have 16 years maturity and sell for 106 percent of par. The market risk premium is 7.4 perc 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 answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 4.8600X 4.8900 12.0800 a. Debt Preferred stock Equity

Lingenburger Cheese Corporation has 7.3 million shares of common stock outstanding, outstanding, par value of $100; and 150,000 bonds with a semiannual coupon rate of 5.4 percent outstanding, par value $2,000 ea 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 current sells for $92 per share, and the bonds have 16 years maturity and sell for 106 percent of par. The market risk premium is 7.4 perc 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 answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 4.8600X 4.8900 12.0800 a. Debt Preferred stock Equity

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 15P

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