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? asked in Business & FinancePersonal Finance · 2 months ago

Need help solving these questions for Finance practice.  Please show steps.  Thank-you.?

Question 1

MV Corporation has debt with market value of $98 million, common equity with a book value of $95 million, and preferred stock worth $18 million outstanding. Its common equity trades at $46 per share, and the firm has 6.2 million shares outstanding. What weights should MV Corporation use in its WACC?

The debt weight for the WACC calculation is_______% (Round to two decimal places.)

Question 2

Book Co. has 1.3 million shares of common equity with a par (book) value of $1.40, retained earnings of $28.4 million, and its shares have a market value of $51.96 per share. It also has debt with a par value of $21.9 million that is trading at 103% of par.

a. What is the market value of its equity?

b. What is the market value of its debt?

c. What weights should it use in computing its WACC?

Question 3

Aluminum maker Alcoa has a beta of about 1.96, whereas Hormel Foods has a beta of 0.46. If the expected excess return of the market portfolio is 5%, which of these firms has a higher equity cost ofcapital, and how much higher is it?

Alcoa's equity cost of capital is_____%. (round to two decimal places.)

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