Question: I need help with this problem but can't use excel Preston Corbei WACC capructure in 2020, we show 120 1100. The med 100 percenoned with
Preston Corbei WACC capructure in 2020, we show 120 1100. The med 100 percenoned with these terms Wario WACH Preston Corp. is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sells for $1,100. The firm could sell, at par, $100 preferred stock which pays a 7.72 percent annual dividend, but flotation costs of 5 percent would be incurred. Preston's beta is 1.2, the risk-free rate is 3 percent, and the market risk premium is 5 percent. The firm's marginal tax rate is 40 percent. What is Preston's WACC
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
