Company A wants to calculate its WACC. It has just issued a 8-year, 8% coupon, non-...

 

Transcribed Image Text:

Company A wants to calculate its WACC. It has just issued a 8-year, 8% coupon, non- callable bond at par value. A's current stock price is $16 and A just paid s $1.5 per share dividend. A's dividend payment is expected to grow at a constant rate of 3% a year. A wants to keep a debt-to-capital ratio of 20%. Tax rate is 40%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)? Your Answer: Company A wants to calculate its WACC. It has just issued a 8-year, 8% coupon, non- callable bond at par value. A's current stock price is $16 and A just paid s $1.5 per share dividend. A's dividend payment is expected to grow at a constant rate of 3% a year. A wants to keep a debt-to-capital ratio of 20%. Tax rate is 40%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)? Your Answer:

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for Company A we need to consider the cost of ... View the full answer