9. WACC (10 points - one page)

Assume it is January 1, 2020. Zelus Sport Shoe Company has three debt issues outstanding.

6.5% Notes December 31, 2028 ($200 million face value) Market price $980.05.

7.0% Bonds, maturing December 31, 2030 ($100 million face value) Market price $984.98.

7.5% Bonds, maturing December 31, 2036 ($200 million face value) Market price $1,029.15.

All bonds have a $1,000 face value and pay interest semi-annually.

Use a 5.0% risk-free rate and a 7.0% market risk premium to compute Zeluss cost of equity. The table shows the weekly closing prices for Zelus and the S&P 500 Index. Last week Zeluss stock closed at $99.75 per share. There are 16 million shares of common stock outstanding.

The company also has 8 million shares of preferred stock outstanding. The preferred stock pays an annual $5.00 dividend and current sells for $50 per share. The tax rate is 30%.

Assume you are doing the WACC calculation on January 1, 2020, and that the semi-annual interest payments of the notes and bonds were paid on December 31, 2019. Show your beta and the costs and weights of all of the WACC components in the table provided. Show costs to 3 decimal places.

Date	Zelus	SP500
12/6/19	99.75	2066.50
11/29/19	101.25	2067.50
11/22/19	97.80	2063.50
11/15/19	102.50	2039.80
11/8/19	102.25	2031.95
11/1/19	98.50	2018.00
10/25/19	88.00	1964.65
10/18/19	87.00	1886.75
10/11/19	90.50	1906.10
10/4/19	89.75	1967.90
9/27/19	93.25	1982.85
9/20/19	89.00	2010.50
9/13/19	82.50	1985.50
9/6/19	85.00	2007.70

Beta (3 decimal places) = __________

Source of Capital	Amount	Before-tax Costs	After-tax Cost	Weight	Weighted Cost
6.5% Notes
7.0% Bonds
7.5% Bonds
Preferred Stock
Common Stock
TOTAL		-	-	WACC