Builtrite has a capital structure of 60% common stock and 40% debt. Bonds being sold will...

 

Transcribed Image Text:

Builtrite has a capital structure of 60% common stock and 40% debt. Bonds being sold will have a $1000 par, 7% coupon rate, a 15 year maturity with a selling price of $1040 and flotation costs of $15 per bond. Common stock currently sells for $30 a share and the firms expects to pay a $1.75 dividend next year. Dividends are expected to grow at a 8% annual rate and Builtrite expects a 5% flotation cost. Taxes are 34%. What is Builtrite's WACC? Builtrite has a capital structure of 60% common stock and 40% debt. Bonds being sold will have a $1000 par, 7% coupon rate, a 15 year maturity with a selling price of $1040 and flotation costs of $15 per bond. Common stock currently sells for $30 a share and the firms expects to pay a $1.75 dividend next year. Dividends are expected to grow at a 8% annual rate and Builtrite expects a 5% flotation cost. Taxes are 34%. What is Builtrite's WACC?

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for Builtrite we ne... View the full answer