A company arranges for $37.5 million in capital. The financing plan is 60% equity and 40%...

 

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A company arranges for $37.5 million in capital. The financing plan is 60% equity and 40% debt. Calculate the WACC for the following. Equity--- 60% or 22.5 Million with Common stock sales at 40% of the equity at 5% cost of dividends, the remaining from retained earnings at a cost of 9%. Debt- 40% or $15 million with bank loans of $10 million at 8% and the remainder bonds at a coupon rate of 10% per year. A company arranges for $37.5 million in capital. The financing plan is 60% equity and 40% debt. Calculate the WACC for the following. Equity--- 60% or 22.5 Million with Common stock sales at 40% of the equity at 5% cost of dividends, the remaining from retained earnings at a cost of 9%. Debt- 40% or $15 million with bank loans of $10 million at 8% and the remainder bonds at a coupon rate of 10% per year.

Answer rating: 100% (QA)

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