Question: can you please help me solve this ? Excel Online Structured Activity: WACC and optimal capital budget Adamson Corporation is considering four average-risk projects with



Excel Online Structured Activity: WACC and optimal capital budget Adamson Corporation is considering four average-risk projects with the following costs and rates of return: The company estimates that it can issue debt at a rate of r ra =9%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $3 per year at $49 per share. Also, its common stock currently sells for $35 per share; the next expected dividend; D 1, is 54.75 ; and the dividend is expected to grow at a constant rate of 4% per year. The target capital structure consists of 75% common stock, 15\% debt, and 10\% preferred stock. The data has been collected in the Microsoft Excel Online fie below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Cost of debt a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Cost of debt Cost of preferred stock Cost of retained earnings b. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations. 1 WACC and optimal capital budget 20 Project acceptance analysis: Calculation Mode: Automatic Workbook Statistics. 20 Project acceptance analysis: Project acceptance analysis: Excel Online Structured Activity: WACC and optimal capital budget Adamson Corporation is considering four average-risk projects with the following costs and rates of return: The company estimates that it can issue debt at a rate of r ra =9%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $3 per year at $49 per share. Also, its common stock currently sells for $35 per share; the next expected dividend; D 1, is 54.75 ; and the dividend is expected to grow at a constant rate of 4% per year. The target capital structure consists of 75% common stock, 15\% debt, and 10\% preferred stock. The data has been collected in the Microsoft Excel Online fie below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Cost of debt a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Cost of debt Cost of preferred stock Cost of retained earnings b. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations. 1 WACC and optimal capital budget 20 Project acceptance analysis: Calculation Mode: Automatic Workbook Statistics. 20 Project acceptance analysis: Project acceptance analysis
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
