Hollydales is a clothing store in East Park It paid an annual dividend of $2 50 last year to its shareholders and plans to increase the dividend annually at 2 It has 500,000 shares outstanding The shares currently sell for $21 25 per share Hollydales has 10,000 semiannual bonds outstanding with a c...

Find the cost of equity via the dividend growth mod ...

Hollydales is a clothing store in East Park. It paid an annual dividend of $2.50 last year

Question:

Hollydale’s is a clothing store in East Park. It paid an annual of $2.50 last year to its shareholders and plans to increase the annually at 2%. It has 500,000 shares outstanding. The shares currently sell for $21.25 per share. Hollydale’s has 10,000 semiannual bonds outstanding with a rate of 7.5%, a of 16 years, and a of $1,000. The bonds are currently selling for $874.08 per bond. What is the adjusted WACC for Hollydale’s if the corporate tax rate is 35%?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...