Saif Company has issued 18,000 bonds with a market price of $110 per bond. Saif also...

 

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Saif Company has issued 18,000 bonds with a market price of $110 per bond. Saif also has 29,000 common shares outstanding at a price of $80 per share. If the common shares will pay a dividend of $4.5 at the end of the year and thereafter dividends will grow at a rate of 3 percent. Given that the after-tax yield on the firm's bonds is 6%. Required: Based on the above information, calculate Saif Company weighted average cost of capital (WACC). Saif Company has issued 18,000 bonds with a market price of $110 per bond. Saif also has 29,000 common shares outstanding at a price of $80 per share. If the common shares will pay a dividend of $4.5 at the end of the year and thereafter dividends will grow at a rate of 3 percent. Given that the after-tax yield on the firm's bonds is 6%. Required: Based on the above information, calculate Saif Company weighted average cost of capital (WACC).

Answer rating: 100% (QA)

Heres how to calculate Saif Companys weighted average cost of capital WACC 1 Calculate the weight of ... View the full answer