XPEL Inc, has a target capital structure of 30% of preferred stock and the remaining equally weighed
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Question:
XPEL Inc, has a target capital structure of 30% of preferred stock and the remaining equally weighed with common stock and debt. The relevant tax fate is 31%. The bonds were issued with 5% coupon rate with a pre-tax cost of debto rest. ammon stocks have a current market price of, 60$. The firm's earnings are expected to grow constant at 8% per year. The firm pays out 40% of its EPS as dividends. The firm is expecting an EPS of 16.5 $ next year. The common stock beta is 0.80 and the expected risk premium is 8%. Preferred dividends are at 1.2% with a market price of 90$ and principal value of 70$.
a. What is the WACC for XPEL Inc?
b.Which is the least source of capital for XPEL Inc? Justify your answer with the sup numerical calculation?
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