Garrett Group is financed with 40% debt, 10% preferred stock, and 50% equity. It pays a...

 

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Garrett Group is financed with 40% debt, 10% preferred stock, and 50% equity. It pays a 9% coupon on its bonds, which have a YTM of 6%. Its preferred stock pays an annual dividend of $4 and sells today for $40 per share. Its common stock sells today for $30 per share. Garrett is expected to pay an annual dividend of $5 on its common stock next year and increase that dividend by 4% per year. The corporate tax rate is 21%. What is Garrett Group's WACC? Garrett Group is financed with 40% debt, 10% preferred stock, and 50% equity. It pays a 9% coupon on its bonds, which have a YTM of 6%. Its preferred stock pays an annual dividend of $4 and sells today for $40 per share. Its common stock sells today for $30 per share. Garrett is expected to pay an annual dividend of $5 on its common stock next year and increase that dividend by 4% per year. The corporate tax rate is 21%. What is Garrett Group's WACC?

Answer rating: 100% (QA)

To calculate Garrett Groups weighted average cost of capital WACC we need to determine the cost of e... View the full answer