Question: Answer correctly and fast please. NO. 4 (12 Marks In 2020, Square has determined its optimal capital structure, which is composed of the following sources

Answer correctly and fast please. Answer correctly and fast please. NO. 4 (12 Marks In 2020, Square

NO. 4 (12 Marks In 2020, Square has determined its optimal capital structure, which is composed of the following sources and target market value proportions: Source of capital Target market Proportions Long-term Debt 25% Preferred Stock 15% Common Stock 60% Long Term Debt: The firm can sell a 10-year, $1,000 par value, 9 percent bond for $970. A flotation cost of 3 percent of the face value would be required. Preferred Stock: The firm has determined it can issue preferred stock at $35 per share par. The stock will pay a $3 annual dividend. The cost of issuing and selling the stock is $4 per share. Common Stock: The firm's common stock is currently selling for $84 per share. The company is planning to pay a dividend of $9.20 next year and it will grow at a constant rate of 3.64% thereafter. It is expected that a new common stock issue must be under-priced at $2 per share and the firm must pay $1 per share in flotation costs. Additionally, the firm's marginal tax rate is 35 percent. a) Find the component costs of debt, preferred stock, and common stock. b) What is the WACC

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