CER Corporation has 8.75 million shares of common stock outstanding, 215,000 shares of RM6 annual dividend preferred
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Question:
- CER Corporation has 8.75 million shares of common stock outstanding, 215,000 shares of RM6 annual dividend preferred stock outstanding, and 105,000 of 7.5% semi-annual bond outstanding. The common stock is currently sells for RM34 per share and has a beta of 1.25, the preferred stock currently sells for RM91 per share, and the bonds have 15 years to maturity and sell for 93% of par. The market risk premium is 8.5%, T-bills are yielding 5%, and corporate tax rate is 35%.
- Calculate the following:
(a) Firm’s market value capital structure.- (b) Cost of equity.
- (c) Cost of preferred stock.
- (d) Cost of debt.
- (e) Weighted Average Cost of Capital (WACC).
Related Book For
Intermediate Financial Management
ISBN: 9780357516669
14th Edition
Authors: Eugene F Brigham, Phillip R Daves
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