A corporation has 10,000 bonds outstanding with a 6% semi-annual coupon rate, 10 years to maturity,...

 

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A corporation has 10,000 bonds outstanding with a 6% semi-annual coupon rate, 10 years to maturity, a $1,000 face value, and a $1,100 market price. The company's 100,000 shares of preferred stock pay a $5 annual dividend, and sell for $50 per share. The company's 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk-free rate is 4%, and the market return is 12%. The company has stock price of $26 and an expected annual dividend of $1.30 a share which is to be paid next month. The dividend growth rate is 4 percent. Assuming a 40% tax rate, what is the company's WACC? A corporation has 10,000 bonds outstanding with a 6% semi-annual coupon rate, 10 years to maturity, a $1,000 face value, and a $1,100 market price. The company's 100,000 shares of preferred stock pay a $5 annual dividend, and sell for $50 per share. The company's 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk-free rate is 4%, and the market return is 12%. The company has stock price of $26 and an expected annual dividend of $1.30 a share which is to be paid next month. The dividend growth rate is 4 percent. Assuming a 40% tax rate, what is the company's WACC?

Answer rating: 100% (QA)

Answer To calculate the Weighted Average Cost of Capital WACC we need to find the cost of each component of the companys capital structure and then we... View the full answer