Assume the market value of Fords' common stock equity is $60 per share, preferred stock equity...
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Assume the market value of Fords' common stock equity is $60 per share, preferred stock equity is $40 per share and the current yield on their debt is 8%. Ford has a beta of 1.7, the market return is 11%, and the risk-free rate of interest is 3%. Ford's preferred stock pays a dividend of $5 each year. Ford's debt pays a coupon rate of 7% and has 15 years until maturity (assume each bond has a face value of $1000). What is Ford's weighted average cost of capital if its tax rate is 30%? Cash Current Assets $350,000 $1,000,000 Current Liabilities $50,000 Long-Term Debt $14,000,000 Total Liabilities $14,050,000 Preferred Stock ($10 par) $500,000 Long-Term Assets $16,150,000 Common Stock ($.10 par) $10,000 Retained Earnings $2,940,000 Total Common Equity $2,950,000 Total Liabilities and Total Assets $17,500,000 $17,500,000 Equity Assume the market value of Fords' common stock equity is $60 per share, preferred stock equity is $40 per share and the current yield on their debt is 8%. Ford has a beta of 1.7, the market return is 11%, and the risk-free rate of interest is 3%. Ford's preferred stock pays a dividend of $5 each year. Ford's debt pays a coupon rate of 7% and has 15 years until maturity (assume each bond has a face value of $1000). What is Ford's weighted average cost of capital if its tax rate is 30%? Cash Current Assets $350,000 $1,000,000 Current Liabilities $50,000 Long-Term Debt $14,000,000 Total Liabilities $14,050,000 Preferred Stock ($10 par) $500,000 Long-Term Assets $16,150,000 Common Stock ($.10 par) $10,000 Retained Earnings $2,940,000 Total Common Equity $2,950,000 Total Liabilities and Total Assets $17,500,000 $17,500,000 Equity
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To calculate Fords weighted average cost of capital WACC we need to determine the weight of each com... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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