This paper circulates around the core theme of Johnson Companyâs stock price is $25 per share and it has 4 million shares together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
g. Johnson Companyâs stock price is $25 per share and it has 4 million shares outstanding. Johnson Company has 70,000 10% annual coupon bonds with a par value of $1,000 each. The maturity of the bonds is 10 years and the YTM is 10.843%. The expected market return, rm, is 16% and Johnsonâs stock beta, ?S, is 1.4. The risk-free rate of interest, rf, is 7% and the corporate tax rate, tc, is 34%.1. Calculate the bond-to-stock ratio of Johnson Company.2. Calculate the Johnson Companyâs weighted average cost of capital, rwacc.3. Johnson Company plans to invest $100 millions in a new soccer ball machine that produces an unlevered pre-tax cash flow of $25 million in perpetuity? The risk of the project is similar to Johnson’s overall risk. Should Johnson Company invest in the new machine?
