80.2K

Verified Solution

Link Copied!

Budget Wings Airlines is considering upgrading is toe of alrcraft as it expands from a regional airline to one offering service to a more timido portal of ches and importe support of this process the CFO Sed you Gutermine the appropriate weighted average cost of capital (WACC) to use in the discounted cash flow analysis. You spend the morning gathering the following formation -Budget Wings has debt outstanding with a market value of $150 million. This dit in the form of bonds that are currently priced at $48.33 per $1,000 face and pay coupon 35. The current de munt VTM on these bonds is 4 11% Budget Wings stock la curenty peliced at $90.48 per share You Wxpect that next year's dividend will be 5756 and you expect dividends to grow at the content market value of Budget Whos como que is $24 milion Budget Winge has pretested equity outstanding with a mathet veke of 530 million that offers an annual avidund of $2.91 and is priced at $48.50 per hora - Budget Wings pays corporate taxes at a rate of 35% Based upon this information Budget Wing current weighted average com el capitant (WACC) ki dopust to which of the following OM 10.72 B. 5415 C7135 OD 7.40% DE 6709 Click to see your own Budget Wings Ansis considering upgrading is feet of arcats i pands from aronalarinete one frig vita moratewide portfolio of creada porta in support of this process the CFO Sour determine the appropriate weighted average cost of capital (WACC) se intented cash and you and the morning gathering the following Information Budget Wings has debt outstanding with a marwat value of 150 million This debt is in the form of bond are currently riced at 19463 1000 cand pay a coupon of 45. The current to my TMI on these bondel 415 Budget Wings ockscrently priced at 550 45 per share you expect that needid wil 53 56 and you wiped dividends to grow at the current mode of Budget Wings contin 22 Budget Wings has preferaty outstanding with a man of $39 million that offers manual de 52 51 and is priced at $4150 per share Budget Wingu pays corporates at a rate of 35% ines is considering upgrading its leet of all craft as it expands from a regional airline to one offering service to a more nationwide portfolio of cities and arport in support of this process the CFO has asked you propriate weighted average cost of capital (WACC) to use in the discounted cash flow analysis. You spend the morning gathering the following information Va debt outstanding with a market value of $150 million. This debt is in the form of bonds that we currently priced at 463 per 1.000 face value and pay a coupion of the current yield to my YTM 14.11% stockis currently priced at 550 401 per share. You expect that next you dividend will be 53.56 and you are dividende teow. The current market value of Bodol Wings common tyle $200 million has preferred equity outstanding with a market value of $30 million that offers an annual dividend of 251 and is pro 548 58 per har pays corporate taxes at a rate of 35% intamallid Winn

Answer & Explanation Solved by verified expert

See Answer