solution

Crawford Enterprises is a publicly held company located in?Arnold, Kansas. The firm began as a small tool and die shop but grew over its? 35-year life to become a leading supplier of metal fabrication equipment used in the farm tractor industry. At the close of? 2015,

At present the? firm’s common stock is selling for a price equal to its book? value, and the? firm’s bonds are selling at par.?Crawford’s managers estimate that the market requires a return of 18 percent on its common? stock, the? firm’s bonds command a yield to maturity of 9 ?percent, and the firm faces a tax rate of 38 percent.

a. What is? Crawford’s weighted average cost of? capital?

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

b. If? Crawford’s stock price were to rise such that it sold at 1.5 times book? value, causing the cost of equity to fall to 16?percent, what would the? firm’s cost of capital be? (assuming the cost of debt and tax rate do not? change)?

a. What is? Crawford’s weighted average cost of?capital?

b. If? Crawford’s stock price were to rise such that it sold at 1.5 times book? value, causing the cost of equity to fall to 16?percent, what would the? firm’s cost of capital be? (assuming the cost of debt and tax rate do not? change)?

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"