(Answered) Omega corporation has 104 million shares outstanding now

Finance

Omega Corporation has 10.4 million shares outstanding, now trading at $59 per share. The firm has estimated the expected rate of return to shareholders at about 11%. It has also issued $220 million of long-term bonds at an interest rate of 6%. It pays tax at a marginal rate of 35%.

a. What is Omega's after-tax WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What would WACC be if Omega used no debt at all? (Hint: For this problem you can assume that the firm's overall beta [β_A] is not affected by its capital structure or by the taxes saved because debt interest is tax-deductible.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92535867
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Suppose the annualized yield on a one-year security today

Suppose the annualized yield on a one-year security today is 0.01. The markets expect the annualized yield on a one-year security to be 0.02 one year from today, 0.03 two years from today, and 0.04 three years from today ...

Describe and provide an example for credit risk operational

Describe and provide an example for credit risk, operational risk and market risk based on the Basel 2 capital accord.

How do you separate the individual aspects of the

How do you separate the individual aspects of the successful partnership pyramid into inputs and outputs and explain why each aspect of the pyramid is an input or an output.

For any normal distribution 68 percent of the observations

For any normal distribution, 68 percent of the observations should fall within plus or minus one standard deviation of the mean. This means 68 percent of annual Tbill returns should fall within 1.3% and 6.9%.

A check cashing company will give you 101 in cash and you

A check cashing company will give you $101 in cash and you repay them $120 in two weeks. What is the effective annual rate of interest for this arrangement?

Joshua borrowed 500 on january 1 2017 and paid 25 in

Joshua borrowed $500 on January 1, 2017, and paid $25 in interest. The bank charged him a service charge of $10. He paid it all back at once on December 31, 2017. What was the APR? (Enter your answer as a percent rounded ...

Tom is pleased to know where the breakeven point is but his

Tom is pleased to know where the breakeven point is, but his business objective is not breaking even; he's in this deal to make money hopefully a lot of money. He has invested his personal savings, as well as other famil ...

B24 amp co stock has a beta of 151 the current risk-free

B24 & Co stock has a beta of 1.51, the current risk-free rate is 3.01 percent, and the expected return on the market is 10.51 percent. What is B24 & Co's cost of equity? There's nothing else to add to the question.

Today you opened up a local bank account your plan is to

Today you opened up a local bank account. Your plan is to make five $4,000 contributions to this account. The first $4,000 contribution will occur today and then every six months you will contribute another $4,000 to the ...

What are the effects of coupon rate to the sensitivity of a

What are the effects of coupon rate to the sensitivity of a bond price and to changes in interest rates?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert