The writer is very fast, professional and responded to the review request fast also. Thank you.
The Wilson Bat Company has, at market value, $300,000 in bonds and $700,000 in stock outstanding. The coupon rate on the debt, which is currently selling at par, is 7%. The company’s current stock price is $20, with an equity beta of 1.8 and an expected dividend next year of $1.40 which is expected to grow at 6% indefinitely. The company faces a corporate tax rate of 25%.
Wilson is considering purchasing Harrison Balls, Inc. As part of its acquisition research, Wilson has determined that the average beta for ball manufacturers is 1.2. The current risk-free rate is 4%, and the current return on the S&P 500 is 8%.
Calculate Wilson’s WACC. The CFO directs that in calculating this WACC you are to calculate the equity return using the CAPM.
If Wilson can expect a return of 9% on its investment in Harrison, should they complete the purchase? Explain?
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more