For the most recent fiscal year, book value of long-term debt at Schlumberger was $11962 million....

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Finance

For the most recent fiscal year, book value of long-term debt atSchlumberger was $11962 million. The market value of this long-termdebt is approximately equal to its book value. Schlumbergerâ€™s shareprice currently is $59.03. The company has 1,000 million sharesoutstanding. Managers at Schlumberger estimate that the yield tomaturity on any new bonds issued by the company will be 8.46%.Schlumbergerâ€™s marginal tax rate would be 35%. Schlumbergerâ€™s betais 0.89. Suppose that the expected return on the market portfoliois 8% and the risk-free rate is 2%. Assume that the company willnot change its capital structure. Also assume that the businessrisk of the projects under consideration is about the same as thebusiness risk of Schlumberger as a whole. What would Schlumbergerâ€™safter-tax WACC be, given this information? Do not round atintermediate steps in your calculation. Express your answer inpercent. Round to two decimal places. Do not type the % symbol.

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4.5 Ratings (894 Votes)

Schlumbergers aftertax Weighted Average Cost of Capital WACC Market Value capital structures Market Value of Debt 11962 Million Market Value of Equity 59030 Million 1000 Million shares x 5903 See Answer

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