Indospring Corp, an automotive company related to the production of vehicles and other components. The company...

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Indospring Corp, an automotive company related to the production of vehicles and other components. The company wants to build a factory to increase production capacity, with a capital target for each bond, preferred stock and common stock of IDR 4 billion, IDR 2 billion and IDR 6 billion. The company will sell bonds with a coupon of 7% interest paid semi-annually and sold for par value. Preferred shares have a dividend of IDR 2000/share and are sold at a price of IDR 25,000/share. Last year, ordinary shares distributed dividends of IDR 3,000/share and the market price was IDR 55,000/share. This dividend is expected to grow 5% per year. Tax Rate is 30%. As a financial analyst and consultant, you are asked to analyze and calculate the rate of return on weighted average costs (WACC) Indospring Corp, an automotive company related to the production of vehicles and other components. The company wants to build a factory to increase production capacity, with a capital target for each bond, preferred stock and common stock of IDR 4 billion, IDR 2 billion and IDR 6 billion. The company will sell bonds with a coupon of 7% interest paid semi-annually and sold for par value. Preferred shares have a dividend of IDR 2000/share and are sold at a price of IDR 25,000/share. Last year, ordinary shares distributed dividends of IDR 3,000/share and the market price was IDR 55,000/share. This dividend is expected to grow 5% per year. Tax Rate is 30%. As a financial analyst and consultant, you are asked to analyze and calculate the rate of return on weighted average costs (WACC)

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for Indospring Corp we need to combine the cost of equity the cost of preferred stock and the a... View the full answer