How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask linda_us Your Own Question

linda_us
linda_us, Master's Degree
Category: Business and Finance Homework
Satisfied Customers: 6995
Experience:  A tutor for Business, Finance, Accounts and other related topics.
Type Your Business and Finance Homework Question Here...
linda_us is online now
A new question is answered every 9 seconds

To finance the purchase, Ranch Manufacturing will sell 10-year

Resolved Question:

To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying 6.6% per year at the market value of the firm's capital structure as follows:
Bonds $4,400,000
Preferred Stock $2,500,000
Common Stock $5,900,000

To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying 6.6% per year at the market price of $1,054. Preferred stock paying a $1.95 dividend can be sold for $25.76. Common stock for Ranch Manufacturing is currently selling for $54.96 per share and the firm paid a $2.91 dividend last year. Dividends are expected to continue growing at a rate of 4.6% per year into the indefinite future. If the firm's tax rate is 30%, what is their WACC?
Submitted: 8 months ago.
Category: Business and Finance Homework
Expert:  linda_us replied 8 months ago.

linda_us :

Welcome to the Site.

linda_us :

My name is XXXXX XXXXX X can help you with this quesiton.

linda_us :

I am working on it and will post the solution soon.

linda_us, Master's Degree
Satisfied Customers: 6995
Experience: A tutor for Business, Finance, Accounts and other related topics.
linda_us and other Business and Finance Homework Specialists are ready to help you
Expert:  linda_us replied 8 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  linda_us replied 8 months ago.

Click here for solution

Please rate my solution by clicking smiley face so that I get paid.

Let me know if you need any further help. You can request me in future by writing "FOR LINDA" at start of your post.
Customer: replied 8 months ago.
Hi Linda,

Thank you for your reply. Can you give me more detail on the bond calculation? I do not have a financial calculator and need to perform this calculation manually.

Thank you.
Expert:  linda_us replied 8 months ago.
I have used the Rate formula in Excel. We can use the Approximate yield formula or long formula (where we equate cash inflows to cash outflows).

Refer this link for Approximate Yield formula

For long formula we will need to solve the following equations

1054 = 66/(1+r) + 66/(1+r)^2 + 66/(1+r)^3 + 66/(1+r)^4 + 66/(1+r)^5 + 66/(1+r)^6 + 66/(1+r)^7 + 66/(1+r)^8 + 66/(1+r)^9 + 66/(1+r)^10 + 1000/(1+r)^1000.

Solving by Approximate formula we give us a approximate result and will not be 100% accurate and solving by long formula is also a tedious process and we might have to try various figure (we still can make mistake or not arrive at correct answer).

I have done this questions atleast 50 time and even a small difference in answer (say .002%) would also be recognized as incorrect answer so the best way to solve is use excel or financial calculator.

I hope this helps. Let me know if you need any further clarification.
Customer: replied 8 months ago.

Got it. I see you put the formulas in the spreadsheet you provided. Thank you so much!

Customer: replied 8 months ago.

I have another question that I'd like you to help me learn the process of solving, if you're available.

Expert:  linda_us replied 8 months ago.
I am available and would be happy to help.

You can create a new thread and write "FOR LINDA" at start of your post to request me.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • linda_us

    Master's Degree

    Satisfied Customers:

    688
    A tutor for Business, Finance, Accounts and other related topics.
< Last | Next >
  • http://ww2.justanswer.com/uploads/LI/lindaus/2012-6-10_04811_IMG20120609164157.64x64.jpg linda_us's Avatar

    linda_us

    Master's Degree

    Satisfied Customers:

    688
    A tutor for Business, Finance, Accounts and other related topics.
  • http://ww2.justanswer.com/uploads/JawaadAhmed/2009-6-27_12137_SIs_SHadi.jpg F. Naz's Avatar

    F. Naz

    Bachelor's Degree

    Satisfied Customers:

    296
    Have completed B.COM and CA Finalist
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg Bizhelp's Avatar

    Bizhelp

    Bachelor's Degree

    Satisfied Customers:

    253
    BA degree and Certified Public Accountant
  • http://ww2.justanswer.com/uploads/ED/educatortech/2012-6-7_1256_williams4.64x64.jpg Mr. Gregory White's Avatar

    Mr. Gregory White

    Master's Degree

    Satisfied Customers:

    188
    M.A., M.S. Education / Educational Administration
  • http://ww2.justanswer.com/uploads/BF/bfc77usa/2011-5-11_42346_face.64x64.jpg Alex's Avatar

    Alex

    Bachelor's Degree

    Satisfied Customers:

    140
    BS in Business Administration with honors. Able to assist in many business related courses.
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Lawyer, Accountant & Researcher

    Satisfied Customers:

    137
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/BR/brittanyshock1/2012-6-16_174743_JAphoto.64x64.jpg Brittany's Avatar

    Brittany

    Professional

    Satisfied Customers:

    26
    AA/Accounting BS/Business
 
 
 

Related Business and Finance Homework Questions