Given the following information, find the company's weighted average cost of capital: 2,500 bonds outstanding, $1,000...

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Given the following information, find the company's weighted average cost of capital: 2,500 bonds outstanding, $1,000 par value, 12 years to maturity and an 8% coupon rate with interest paid annually. The bonds are currently selling for 96% of par. Debt: Preferred Stock: Common Stock: 10,000 shares outstanding, $100 par value paying a $6 dividend per year. The preferred stock is trading for $75 per share. Other information: Debt 60,000 shares outstanding, selling for $80 per share. The beta for the company is 1.25. Note: The category headings will not be given to you on an exam. Market Value Weights Source of Capital Preferred Common Total The risk-free rate of 4.5%, the expected return on the market is 12.5% and the company's tax rate is 40%. Market Value 2,400 750 4,800 7,950 30.19 9.43 60.38 100.00 Required Return 8.55 8.00 14.50 After-tax Return 5.13 8.00 14.50 Weighted. Average Given the following information, find the company's weighted average cost of capital: 2,500 bonds outstanding, $1,000 par value, 12 years to maturity and an 8% coupon rate with interest paid annually. The bonds are currently selling for 96% of par. Debt: Preferred Stock: Common Stock: 10,000 shares outstanding, $100 par value paying a $6 dividend per year. The preferred stock is trading for $75 per share. Other information: Debt 60,000 shares outstanding, selling for $80 per share. The beta for the company is 1.25. Note: The category headings will not be given to you on an exam. Market Value Weights Source of Capital Preferred Common Total The risk-free rate of 4.5%, the expected return on the market is 12.5% and the company's tax rate is 40%. Market Value 2,400 750 4,800 7,950 30.19 9.43 60.38 100.00 Required Return 8.55 8.00 14.50 After-tax Return 5.13 8.00 14.50 Weighted. Average

Answer rating: 100% (QA)

E10 9 10 11 12 13 14 15 16 17 18 19 20 21 A Debt B X Common stock Pr... View the full answer