Emerson Corporation has 15,000 bonds outstanding each with the following characteristics Maturity Par Value 10 years $
Question:
Emerson Corporation has 15,000 bonds outstanding each with the following characteristics Maturity Par Value 10 years $ 1,000 ( semi - annual 975.55 Coupon Rate Market Price also has 20,000 preferred shares outstanding paying a dividend of % and currently trading at 122 per share and 550,000 shares of common stock outstanding currently trading at $95. Over the past year , the daily returns of the common stock price of Emerson have shown a covariance with the market of 0.01 , while the standard deviation of the market index was about 11 The Risk Free rate is at 3% and the expected return of the market is 10\% From the most recent financial statements of Emerson Corporation , the marginal tax rate fis 35 % and its balance sheet shows a debt -to -equity ratio (excluding preferred shares ) of 56 order to calculate the WACC ( weighted average cost of capital ) , what are the weights that should be used for each component of Emerson capital structure ?
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman