6. Given the following information for BobCat Inc., calculate the firm's WACC. Assume the firm's tax...
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6. Given the following information for BobCat Inc., calculate the firm's WACC. Assume the firm's tax rate is 21% Debt: 5,000 6% semiannual coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for $1,150. The firm uses the existing yield to maturity on this debt issue as an estimate for the cost of new debt Equity: 175,000 shares outstanding, selling for $58 per share; the firm's beta is 1.10 Market: 7% market risk premium and 3% risk free rate The firm's stock is valued using the constant growth model. The firm's next expected dividend is $3.48 and is expected to grow at 5% forever. . Use a simple average of the two cost of equity components in the final WACC calculation. 6. Given the following information for BobCat Inc., calculate the firm's WACC. Assume the firm's tax rate is 21% Debt: 5,000 6% semiannual coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for $1,150. The firm uses the existing yield to maturity on this debt issue as an estimate for the cost of new debt Equity: 175,000 shares outstanding, selling for $58 per share; the firm's beta is 1.10 Market: 7% market risk premium and 3% risk free rate The firm's stock is valued using the constant growth model. The firm's next expected dividend is $3.48 and is expected to grow at 5% forever. . Use a simple average of the two cost of equity components in the final WACC calculation.
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